After Ethereum's historic merge upgrade, the Ethereum community is entering a new era.
Ethereum has now become an 'Ultra Sound Money', which means that over time, Ethereum This means that the circulation volume decreases and purchasing power and value increase.
Ethereum and deflation
Before the merge upgrade, Ethereum used a proof-of-work (PoW) system that issued about 14,000 ETH of new ether every day.
However, after completing the transition to proof-of-stake (PoS), the amount of ether issued decreased. It decreased significantly, and as a result, Ethereum entered a state of deflation.
In addition, the burning mechanism (EIP-1559) through increased usage of the Ethereum network is burning more ether than the rewards from staking. As a result, the circulation of Ethereum is no longer increasing but is decreasing.
Sound Money and Ultra Sound Money
Sound money refers to currency whose purchasing power remains stable over time. Assets like gold and Bitcoin are examples of traditional sound money.
On the other hand, Ultra Sound Money has purchasing power It refers to a deflationary currency that is not only stable but also increases in value over time.
In the case of Ethereum, after the merge upgrade, it effectively reduced the amount of Ether in circulation, ultimately becoming the driving force behind converting Ethereum into ultra-sound money.
Closing Thoughts
Ethereum has become a deflationary, ultra sound money after successfully completing the transition from proof-of-work to proof-of-stake. Ethereum is at the center of the virtual asset ecosystem, and its value is likely to continue to rise as transaction usage increases further in the future.
