Ethereum (ETH) is a deflationary cryptocurrency and potentially better store of value than Bitcoin
According to a November 18 paper by four Australian researchers, the EIP-1559 upgrade is a tool for making Ethereum (ETH) a deflationary cryptocurrency and potentially a better store of value than Bitcoin.
Academic research claims Ethereum is a superior store of value to Bitcoin
The research comes coauthored by Ester Félez-Viñas from the University of Technology Sydney, Sean Foley from Macquarie University, Jonathan Karlsen from the University of Western Australia, and Jiri Svec from the University of Sydney.
Accordingly, Ethereum’s EIP-1559 upgrade in August saw the network burn a portion of transaction fees and over a million ETH burned from the circulating supply of 118,583,580. And this has led Australian university researchers to question Bitcoin’s reputation as the best store of value in crypto, with Ethereum on track to becoming the world’s first deflationary currency.
Sometimes, transaction fees amounting to more than 50% of the 12,000 newly minted ETH per day are burned thanks to EIP-1559. So the demand for Ethereum increases due to its robust ecosystem of decentralized finance dApps, more ETH will be burned.
“Annualizing the rate of Ethereum creation since EIP-1559, the expected increase in the total Ethereum supply is only 0.98%, being less than half the 1.99% increase in Bitcoin supply which is almost certain in the same period”, the researchers write that Ethereum is already less inflationary than Bitcoin.
Thanks to this, the researchers concluded that Ether provides better inflationary hedging properties than Bitcoin. An ETH may therefore offer superior long-term value storage than the leading cryptocurrency.
Meanwhile, this conclusion will probably be further reinforced when a recent Ethereum Improvement Proposal (EIP) put forth by network co-founder Vitalik Buterin aims to address transaction costs, one of the network’s most significant drawbacks.
Last month, Buterin put forward EIP-4488 which aims to decrease the transaction ‘calldata.’ This could provide some short-term respite from those galloping gas fees. The primary purpose of the proposal is to reduce gas fees on Ethereum’s expanding ecosystem of layer two scaling solutions.
Ethereum developers have reacted positively to EIP-4488 taking to Twitter to explain what is under the hood. Technically, EIP-4488 reduces the calldata cost from 16 to 3 gas per byte while adding a cap on calldata per block to mitigate security risks.
At the time of writing, ETH is changing hands at $4,558.
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