Korpi states, EIP-1559 is scheduled to go live this week, and I still see many wrong takes on its impact.  EIP-1559 is one of the most important upgrades in Ethereum’s history. Its purpose is to improve user experience on ETH by changing how transaction fees are estimated and how the network reacts to surges in usage.

It doesn’t lower gas fees in the long run because it’s not a scalability improvement. However, it may help users not overpay for transactions due to a better fee estimation process. It also smooths out gas prices between blocks, thanks to variable block sizes.

What everyone is excited about is ETH burn. After EIP-1559, part of the transaction fee is burned and removed from circulation. But it doesn’t mean that ETH immediately becomes a deflationary asset. For that to happen, ETH burned must be higher than ETH issued in block rewards.

Under the current proof-of-work (PoW) model, ETH’s issuance is quite high (~4% of the total ETH supply annually). To offset this issuance rate by ETH burn after EIP-1559, we would need ~150 gwei consistently. We have seen this before, but it’s unlikely to sustain.

The situation changes dramatically when Ethereum is fully upgraded to proof-of-stake (PoS) consensus algorithm. It will lead to a large drop in ETH issuance rate to ~0.4% annually. This issuance reduction of 90% is equivalent to 3 BTC halvings, hence “triple halving.”

Under the future PoS model, transaction fees of ~20 gwei would have to be sustained to offset ETH issuance. This is when ETH truly becomes a deflationary asset, and it’s hard to imagine a scenario in which it doesn’t happen.

Summing up: – EIP-1559 will burn ETH but not make it deflationary by default. With PoW, only high gas fees can offset high issuance. – Upgrade to PoS can be referred to as “triple halving” due to a large drop in ETH issuance. – EIP-1559 + PoS = deflationary ETH. – ETH =

All the reasons how ETH can become deflationary are very clear. Things appear to be bullish for ETH.

Gabor Gurbacs stated Bitcoin doesn’t have competition for a store of value status in the cryptosphere. Ethereum has a ton of competition for smart contract platform status, including Bitcoin L2, Tron, and Solana, just to name a few. Thoughts? Many people who have ETH will be using it purely as a store of value. Many people who have ETH will be using it purely as a store of value.