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DeFi researcher: PoS gives Ethereum economic structure to overtake Bitcoin

After the Merge, ETH inflation will be minimised, security will be enhanced, and Ethereum will present itself as a digital bond, according to researcher Vivek Raman.

As Ethereum transitions to proof-of-stake (PoS), a researcher in decentralised finance (DeFi) argues that the platform can supplant Bitcoin (BTC) as the dominant cryptocurrency.

In a Twitter thread, researcher Vivek Raman noted that the next Ethereum Merge could improve the smart contract platform’s economic structure. The transition to PoS, according to Raman, reduces Ether (ETH) inflation, improves security, and positions the cryptocurrency as a digital bond.

Raman predicted that after the Merge, ETH inflation will fall from 4.3% to 0.2%. This results in a 95 percent reduction in issuance, restricting the number of ETH that may be sold per day, according to the researcher.

In addition, the researcher indicated that the platform’s security would be improved following the Merge. Citing a post by Ethereum co-founder Vitalik Buterin, Raman emphasised that once PoS is implemented, it will be more expensive to attack the network.

Raman believes that the Ethereum Merge will also enable ETH to supplement Bitcoin’s use cases as a store of value and collateral asset. While BTC will act as digital gold, according to Raman, ETH will present itself as a digital bond and DeFi’s primary collateral asset.

In early July, the average gas prices required to conduct transactions on the Ethereum network decreased to $1.57, a level not seen since 2020. The decline in petrol prices parallels the decline in NFT sales, with daily NFT purchases falling to one-year lows.

While network gas fees are modest, the Ethereum Name Service has seen a 200 percent increase in registrations. In early July, the ENS Dashboard displayed an increase from 11,042 registrations to 29,740. The buzz is also attributable to the second-largest ENS sale that occurred on the same weekend as the registrations spike.


Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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