- Ethereum 2.0 will lower the issuance of new coins from 4.7 million Ethereum per year to below 2 million Ethereum per year
Vitalik Buterin, who is the Co-Founder of Ethereum, says that Ethereum’s inflation rate will be drastically lowered when Ethereum 2.0 finally launches.
Essentially, right now Ethereum uses proof of work (PoW), but will be transition to Proof of Stake (PoS) in order to increase scalability. Currently with PoW 4.7 million Ethereum are mined per year, which is an inflation rate of roughly 4%, and causes significant selling pressure on the Ethereum market.
Apparently when Ethereum becomes PoS with the launch of 2.0, the amount of new coins being minted will depend on how many people are staking, and this will lead to 100,000 to 2 million new Ethereum being minted per year, which is a much lower inflation rate of roughly 0.1% to 2%.
This will lead to much less selling pressure on the Ethereum market, and therefore will likely lead to a long term rise in Ethereum’s price, much like the effect of a Bitcoin block halving.
All of this being said, it is still unclear as to when exactly Ethereum 2.0 will finally launch.
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