CEO of $4,700,000,000 Crypto Asset Manager Says Upcoming Ethereum Upgrade Is an ‘Exciting Prospect’ – Here’s Why
Pantera Capital CEO Dan Morehead highlights the benefits of Ethereum (ETH) moving to a proof-of-stake (PoS) consensus mechanism.
In Pantera’s latest Blockchain Letter, the crypto-focused hedge fund’s CEO explains that a consequence of the network’s upcoming merger will be the elimination miner rewards and thus a reduction in the daily issuance of new ETH from 14,600 to 1,600 tokens.
According to Morehead, this will move the leading smart contract platform towards being a deflationary asset.
“After the “Fletting”, Ethereum’s issuance rate of 1600 ETH/day in stake rewards minus the fees burned the nets to zero. If you subtract penalties incurred by validators (eg being cut for misbehavior) and ETH lost over time, this will make Ethereum issuance net negative.
In the context of today’s inflationary environment, Ethereum’s shift towards a potentially deflationary asset is an exciting prospect.”
The newsletter goes on to discuss how the transition from proof-of-work (PoW) will make the project more environmentally friendly.
“Moving to proof-of-stake will have a major impact on Ethereum’s sustainability with an estimated reduction in energy consumption of 99.95% – obviously a huge improvement from an environmental, social and governance (ESG) perspective.
The 99.95% energy reduction will come from Ethereum’s transition away from proof-of-work – a process that uses electricity and hardware as the main costs to secure the network.
In a proof-of-stake system, the main cost of securing the network is capital in the form of staked tokens, and it doesn’t require much power at all.”
Just this week, the Ethereum Foundation provided a detailed update on the merger’s timetable. The process will be initiated in several phases, starting with the Bellatrix upgrade on September 6th followed by the formal transition sometime between September 10th and 20th.
The merger aims to solve the network’s scalability issues by setting the stage for future upgrades, including sharding.
Ethereum has been nursing a small mid-week rally after falling from above $1,850 over the weekend. ETH has gained 8.3% in the last 48 hours, trading at $1,701.
Pantera Capital currently participates in 100 venture investments and has $4.7 billion in assets under management.
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