Ethereum token issuance continues inflationary, deflationary swing Samuel Wan · 7 seconds ago · 3 min read Three months since the Merge, net token supply issuance has been majority inflationary due to low network usage being a factor to the rate of burn.3 min read Updated: December 20, 2022 at 12:31 am Cover art/illustration via CryptoSlate After years in the making, the Merge was finalized on Sept.15, switching Ethereum from Proof-of-Work (PoW) to Proof-of-Stake (PoS).The roll-out enacted several benefits, including cutting the chain’s energy consumption by a reported 99% and setting the groundwork for sharding to improve scaling in a future hard fork.The Merge also picked up with EIP 1559, which rolled out with the London hard fork in August 2021.This introduced a simplification of Ethereum’s fee market mechanism, including breaking fees into base fees and tips, then burning the base fee.Under a PoS mechanism post-Merge, burning base fees were sold as a deflationary mechanism that would cut token issuance by as much as 88%.CryptoSlate analyzed Glassnode data to assess whether the claims hold up.
Net supply issuance has not been consistently deflationary in the three months since the Merge.Ethereum deflation fluctuates According to Ethereum, under the previous PoW system, miners were issued around 13,000 ETH per day in block mining rewards.Now, post-Merge, stakers receive around 1,700 ETH in daily rewards – this equates to an 87% reduction in issuance.However, with the advent of base fee burns, the scope for a daily net reduction in supply is enabled.Base fee burns depend on network usage.The busier the network on a given day, the more base fees are burnt.The minimum activity figure for burned base fees to exceed 1,700 ETH, therefore leading to a net decrease in supply, is around 16 Gwei a day.The chart below shows that net supply issuance was inflationary immediately after the Merge until Nov.9, hitting a high of 15,000 tokens in early October.
Following an approximate two-week deflationary stint from Nov.10, net supply issuance flipped to inflationary once more before returning to a net negative supply issuance from Dec.12 onwards, sinking to a new low of -11,000 tokens on Dec.19.To date, periods of supply inflation exceed supply deflation.Net Inflation Rate The chart below shows the issuance rate and burn rate dropping post-Merge, with the former metric decreasing significantly after Sept.15.Previously, the issuance rate was relatively steady, holding at around 4.1% since October 2021.
At the same time, over this period, the burn rate was much more volatile in comparison, peaking at about -5% before declining from August onwards to a rate of 0.35%.The current issuance rate of 0.5% and burn rate of -0.9% give a net supply change rate of -0.4%.Multiplying the burned base fee by the spot price at the time of burn results in the Value of Supply Burned metric.Since June 2022, the daily value burned has sunk significantly to approximately $4 million daily.The cumulative sum of all burns to date comes in at just under $9 billion.Staking metrics Around 13% of the Ethereum supply is staked.This is significantly less than BNB Chain at 90.2%, Cardano at 71.6%, and Solana at 68.6%.Currently, staked ETH cannot be unlocked, likely a factor in the relatively low percentage of supply staked versus other large caps.
However, once enabled, it is unclear whether this will trigger a mass unstaking of tokens, therefore cutting the issuance of daily ETH staking rewards, or if more tokens will be staked based on being able to move in and out of staking with fewer restrictions.Since late 2020, the ETH supply on exchanges has fallen from 30% to 16.5%.In contrast, the supply in smart contracts has gone the other way, rising from 15% to 26%—the two cross around mid-2021.The total number of ETH staked is approaching 12 million.
However, the distribution of this is highly concentrated among a few validators as follows: – Lido – 4.6 million – Coinbase -2 million – Kraken – 1.2 million – Binance – 1 million Read Our Latest Market Report Research: How Ethereum is gradually becoming a store of value Oluwapelumi Adejumo · 4 hours ago · 2 min read With fewer losses despite the ETH’s steep drop in 2022, most investors are bullish on the asset and expect its value to rise significantly with time.2 min read Updated: December 18, 2022 at 1:27 am Cover art/illustration via CryptoSlate Ethereum (ETH) might be gradually turning into a store of value based on the volume of the digital asset being held by long-term investors, CryptoSlate’s analysis of Glassnode data revealed.With Ethereum down by more than 70% from its all-time high during the current market cycle, one would think that investors would massively dump the coin to recoup their funds.However, Glassnode HODL waves data showed that long-term investors currently hold 80% of ETH supply, i.e., those holding the token for more than six months, which is very similar to the 2018 bear market level.HODL wave is a metric used to measure the number of investors holding a particular digital asset.The fact that many long-term holders were yet to sell their assets suggests their conviction in ETH’s long-term value.
This is a sign common to Bitcoin, where long-term holders usually hold through the rough patches because they believe the asset is valuable in the long term.In fact, during the height of the Terra collapse contagion in July, a new cohort of long-term holders who have held Ethereum for 7 to 10 years began to emerge.According to the above chart, this group of investors holds about 3% of the whole ETH supply.Investors in the 1-2 years band are underwater Meanwhile, ETH investors holding for 1-2 years are most likely underwater given the likely bought during the 2021 bull run and early 2022.The high unrealized losses might have prevented this cohort from selling.The total supply for this group saw a significant jump in July 2022, when the asset mostly traded above $1000.
These investors now hold 40 million ETH, similar to the amount held by BTC investors who have held for at least a year.Glassnode data also showed that ETH’s total supply in loss is currently at 44 million ETH –a slight drop from the cycle peak of 50 million in June.This pales significantly to the number recorded during the Covid -19 pandemic and the 2019 bear market when losses in supply crossed 72 million tokens.With fewer losses despite the ETH’s steep drop in 2022, most investors are bullish on the asset and expect its value to rise significantly with time.The bullishness is tied to the fact that ETH supply has been deflationary a few times since the Merge event.Analysts have predicted that increased network activity would result in a sustained deflationary supply.Read Our Latest Market Report Analysis of on-chain stablecoin data reveals decline in USDT dominance Josh O’Sullivan · 14 mins ago · 2 min read Demand for USDT remains high, but USDT dominance in the stablecoin market has decreased as other stablecoins like USDC and BUSD have risen.2 min read Updated: December 18, 2022 at 1:18 am Cover art/illustration via CryptoSlate In 2019, Tether (USDT) had a global stablecoin dominance of 89%, but it has since fallen to just under 50%, according to on-chain data provided by Glassnode — analyzed by CryptoSlate.
Throughout 2020 and 2021, other stablecoins like USD Coin (USDC) and Binance USD (BUSD) began to rise, with USDC reaching 33% dominance and BUSD reaching 16% dominance.DAI, on the other hand, remained constant.Recovery on the horizon In May, USDT saw $20 billion in redemptions but has since begun to recover.The growth of stablecoins slowed, with a peak of $24 billion daily inflows.Outflows also increased but peaked at only $8 billion, indicating that most of the capital remains stablecoins.USDT remains the only stablecoin to have made higher highs in daily transactions and still see strong demand.Total stablecoins on exchanges There is approximately $40 billion worth of stablecoins on exchanges, with a total of $4 billion being redeemed this week alone.
This indicates that investors still believe in stablecoins and are likely waiting for the next bull run or dip.By analyzing the STBL virtual asset Glassnode data – which aggregates data from all ERC20 stablecoins – we can see the growth of stablecoins was significant up until March, reaching a peak of $24 billion in daily redemptions.
Risk-on to Risk-off This year’s risk-off environment has shifted from inflows to outflows for stablecoins, though the outflows have been relatively small, reaching a maximum of $8 billion.Despite this, the majority of capital remains in stablecoins.USDC saw a 10% rise over the same period and has since increased to 33%.
It peaked in June with 38%, leading to speculation about a potential flip of USDT.On the other hand, BUSD did not gain significant traction until the second half of the year, with a dominance of 10%.
It has since grown to 16% dominance and has been gaining momentum, particularly since the collapse of FTX.Read Our Latest Market Report Research: Bitcoin long-term holders remain bullish despite losses Oluwapelumi Adejumo · 4 hours ago · 3 min read Glassnode data, as analyzed by CryptoSlate, showed that long-term holders might be holding their Bitcoin because they stand to incur substantial losses if they sell.3 min read Updated: December 15, 2022 at 6:34 pm Cover art/illustration via CryptoSlate Bitcoin’s (BTC) year-long decline has left several holders with unrealized losses, including long-term holders (LTH) who have held the coin for at least six months.However, CryptoSlate’s analysis of Glassnode data showed that this group of investors remains bullish on the flagship digital asset.According to Glassnode data, the cohort holds a record-high amount of Bitcoin –13.8 million.
The group is also considered the smart money of the Bitcoin ecosystem because they usually accumulate during bear markets and sell during bull runs.For context, long-term holders added around 1 million BTC to their holdings in November.This was because LUNA’s crash in May triggered a significant dip in price that allowed traders to accumulate the asset.Those that bought Bitcoin at the time are now part of this cohort, as they have held for the last six months.Long-term holders at ATH despite Nov.
capitulation Meanwhile, the recent FTX collapse led to a minor capitulation among LTH, causing their supply to drop slightly in early November.Despite this, the Glassnode data chart below shows that long-term holders’ supply is still at an all-time high.For many, that’s bullish because investors are not capitulating.Ark Investment shares this view, as it said the data point indicates the cohort’s “long-term focus and high conviction, despite recent events.” 6 million BTCs held at a loss by long-term holders Glassnode data, as analyzed by CryptoSlate, showed that long-term holders might be holding their Bitcoin because they stand to incur substantial losses if they sell.
According to the data, around 6 million BTC held by long-term holders is currently at a loss –the highest ever.The last time the group had this much-unrealized losses was in 2015, 2019, and 2020 when they held over 5 million BTC.This cycle’s long-term holders recorded the two biggest losses Further analysis by CryptoSlate showed that long-term holders recorded two of the biggest losses in history during this market cycle.According to Glassnode data, this cycle’s long-term holders lost 0.09% of BTC’s market cap per day in June and November when the industry reeled from the collapse of Terra’s ecosystem and FTX’s crash.
This was only surpassed by losses recorded in 2015 and 2019.Regardless of these huge losses, 78% of BTC’s entire supply is still held by long-term holders, similar to the 2015 bear market levels.
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