10% of Ethereum Now Staking – Trustnodes

More than 10 million eth have now been sent to the deposit contract, worth $26 billion, with this milestone crossed in just over a year since the ethereum 2.0 genesis block launched on December 1st 2020.

Come this December, another milestone may be reached in staking rewards being unlocked circa six months after the Merger to full Proof of Stake (PoS).

The final testnet has now been launched for that merger, with it expected to go live maybe this June.

Once it does there will be a six month period whereby stakers keep accumulating rewards, currently at 4.8% APR in eth, but are unable to bring them to market prior to the unlocking.

During that time there will be no sell pressure either from miners or stakers because miners will be kicked out, while stakers will have to wait.

Ethereum miners currently receive more than 13,000 eth a day, currently worth $34 million or about $1.2 billion a month.

After the merger, expected around June, they will receive precisely zero. At which point a different chart will become relevant, the stakers daily reward:

As we can see above, the total daily rewards for stakers have gradually been growing bit by bit from about ◊1,000 a day.

That’s due to a formula that tries to keep APR attractive even as new stakers come online, making this a moving unit unlike in Proof of Work (PoW) where daily reward is flat.

So we need to engage in some estimates. One of them being about 300,000 eth have been given out in staking rewards so far, and it should be about 500,000 in total to maybe 700,000 by the time they are unlocked.

That sounds a lot, but it’s about two months in Proof of Work mining, and it’s a one off new supply that will enter circulation once staking is unlocked six months after the merger.

Afterwhich, new supply will enter circulation at the rate of 0.4% a year, down from currently 4%, or about $100 million a month at current prices, as opposed to $100 million every three days under current PoW.

So it’s a drastic change in supply, and the biggest by far, but it’s not a big differentiator from bitcoin which is currently running at circa 1.7% a year, and after the 2024 halvening will go down to 0.8%.

Eth will do it first, in just three months now, and it will have a period where there’s no new circulating supply in-between the merger and the unlocking, and so it may gain ground on bitcoin.

But if you have a longer perspective, it’s not so much versus bitcoin more than following bitcoin in as far as, where probabilities are concerned, here they may well be pretty good in suggesting either this year, next year, or 2024-25, eth has a very good chance of nearing current bitcoin prices.

That’s under the assumption of course that all else remains equal, and they have so far in eth following bitcoin almost to the dot in actual price numbers, just four years behind.

That’s because eth has also had its halvings of sorts as can be seen in the block rewards chart above.

This time though eth is not going to 1.7%, current bitcoin inflation rate, as it previously used to in maintaining pretty much twice the bitcoin inflation rate and so following its cycle.

Instead eth is kind of front-running the next bitcoin halving in 2024 in jumping now to the inflation rate bitcoin will have, giving eth a two years head start for once.

Does that mean flippening? That’s the trillion dollar question isn’t it, which doesn’t have much space for analysis in this specific page so we’ll be satisfied with stating that realistically we’ll be in unchartered territory with anything up for grabs, including a 10x certainly from the current price, but even from the recent top.

From that $5,000, that would give eth a circa $5 trillion market cap, which at the very least is not big enough to discard the suggestion that eth may follow bitcoin again to perhaps $50,000 in price.

Huge right, but whether it will actually happen, only time can say.