Ethereum (ETH) is not decentralized or deflationary, the data suggest
The second largest cryptocurrency project is showing increasing signs of centralization.
Ethereum is fast approaching the update called The Merge, as a result of which it will change its current Proof of Work (PoW) consensus to Proof of Stake (PoS). Although this network is presented as decentralized, and the cryptocurrency belonging to it - Ether (ETH), many people have recently described it as deflationary, in fact the data suggests completely different conclusions.
Almost 69% of the ETH supply blocked in the Eth2 deposit agreement belongs to just 11 suppliers
As much as 85% of Ether's supply is assigned to cryptographic addresses with 100 ETH coins or more
Despite the implementation of EIP-1559, the rate of burning some of the gas charges in the Ethereum network has never exceeded the rate of minting new ETH coins
Ethereum cryptocurrency is heavily criticized
While enthusiasts of the second largest cryptocurrency project are eagerly awaiting the upcoming changes, skeptics try to point out the flaws of this ecosystem. Among the accusations against Ethereum was the lack of decentralization.
Some market observers pointed out that more than half - as much as 69% of the ETH supply blocked in the Eth2 deposit agreement belongs to only 11 entities. In addition, it was noted that 60% of the Ethers in the Beacon Chain belong to 4 suppliers. Moreover, over 30% of the ETH supply from Eth2 belongs to the Lido platform.
Data from Glassnode shows that over 85% of the ETH supply in circulation is assigned to addresses with at least 100 Ethers. Further, 30% of the supply of the second largest cryptocurrency is in the hands of entities with 100,000 ETH coins and more in their wallets.
Another point of contention among critics and supporters of Ether is the nature of this virtual currency. In September 2021, EIP-1559 was introduced as part of the hard fork, as a result of which part of ETH is burned with each transaction carried out on the Ethereum blockchain. As a result, the cryptocurrency belonging to this project began to be called deflationary by some.
As it turns out, the rate of burning Ether has never exceeded the rate of minting the new ETH coins. In order for the second largest virtual currency to cease to be inflationary, its amount burned in gas fees would have to exceed the amount of ETH minted. In addition, the burning rate has decreased recently due to slower network activity.
ETH with a strong rebound from this year's declines in quotations
This year, the cryptocurrency belonging to Ethereum recorded its minimum price around $ 896, according to averaged data from the CoinMarketCap platform. From that level, Ether's price jumped by over 100%, recently breaking the $ 2,000 line. Currently, ETH is trading around $ 1.8K per coin.
Yesterday's session on the chart of the second largest virtual currency was opened and closed above USD 1.9 thousand, which resulted in a slight price change. At the current price, Ether is more than 60% away from its ATH.
