Chart of the Day
The London Upgrade, the largest update to the network’s core protocol in years, has been activated. The most notable change — EIP 1559 — constitutes a major shift in the economics of Ether through the initiation of a more predictable fee structure that also reduces ETH supply. So far, Ether has been an inflationary asset with new issuance increasing total supply over time. Burning the base fee, i.e. removing them permanently from circulation, will reduce total supply and catalyze the transformation of Ether to a “store of value” not unlike Bitcoin. The shift toward a deflationary asset will likely attract more institutional interests and bring about broader adoption. However, the London Upgrade, among many steps toward deflation, did not alter the underlying Proof-of-Work mechanism. The paradigm shift that moves Ethereum away from mining entirely is Eth2, indicated by a vertical dive on the chart.