The term “ultrasound money” has been frequently used within the Ethereum (ETH) community, often to describe the network’s potential to become a deflationary asset with superior tokenomics to Bitcoin (BTC). This narrative has its supporters and detractors, with some arguing it is based on overly optimistic assumptions.

A developer known as antiprosynthesis.eth has challenged the “ultrasound money” narrative, suggesting that it is often accompanied by jargon that may obscure the reality of Ethereum’s monetary policy. The developer believes the narrative is somewhat exaggerated and filled with “pseudo-scientific hocus pocus” that could potentially mislead ordinary users.

Antiprosynthesis.eth maintains a neutral stance, arguing that Ethereum’s monetary policy is primarily designed to be sustainable, avoiding the dangerous pitfalls of hyperinflation or excessive deflation. The developer emphasizes the importance of striking a balance in token emissions. In Ethereum’s case, this is achieved by burning a portion of gas fees. This was made possible by the activation of EIP-1559 in 2021, which changed the first smart contracts platform’s bidding system, creating a system where the network sets a base fee with the allowance for a user to “tip” the validator. The base fee is burnt, helping the network become deflationary–or, as researchers argue, sustainable.

On the other hand, Bitcoin will continue to issue new coins to miners until all the 21 million BTC are distributed. This will take more than a decade. To achieve this, the Bitcoin protocol has been halving mining rewards. In the early years of Bitcoin, miners received 50 BTC whenever they confirmed a block of transactions. However, after the network halves in April, miner rewards per block will fall to 3.125 BTC.

Comparing the two approaches, the Ethereum developer notes that each system has its mechanism of ensuring its tokenomics are sustainable. The analyst adds that the “ultrasound money” narrative championed by supporters may be exaggerated and, to some degree, an overly optimistic assessment of ETH’s ability to be deflationary.

As of January 10, Ethereum has destroyed over 3.9 million ETH since the implementation of EIP-1559 based on the Ultra Sound Money data. During this time, the network issued more than 6.9 million. This confirms that Ethereum has been burning more ETH recently; it remains inflationary, to a smaller degree, like Bitcoin. Still, unlike Bitcoin, Ethereum’s issuance rate has been dropping steadily due to increased token burning.

This News Article was automatically generated by Bob the Bot (AI)

Information Details
Geography Global
Sentiment neutral
Relevance Score 1
People None
Companies Ethereum, Canva, Bitcoin, TradingView
Currencies Ethereum, Bitcoin
Securities None

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