Feb 15, 2023

37% Less ETH on Exchanges Since Merge Upgrade

Ethereum (ETH), the second largest cryptocurrency by market capitalization, has seen a steady decrease in exchange supply over the past six months, following the Merge. The Ethereum network underwent a major upgrade in September 2022, transitioning from a proof-of-work (PoW) to a proof-of-stake (PoS) network.

Crypto analytics firm Santiment reported that there is 37% less ETH on exchanges since the Merge, with a total of 19.12 million ETH, worth $31.3 billion, on exchanges in September before the Merge, and now 13.36 million ETH, worth $19.7 billion, in the second week of February.

It is believed that the decrease in ETH supply on exchanges is a positive sign, as there is less ETH available to trade or sell. A significant portion of the ETH supply is being moved into self-custody, while many traders are also opting to stake with the upcoming Shanghai upgrade in March.

At present, 16 million ETH, or 14% of the total supply, is staked on the Beacon Chain, which is worth approximately $25 billion at current prices. This amount is expected to become liquid after the Shanghai hard fork.

In addition to the decrease in ETH supply held on exchanges, ETH’s overall market supply has also decreased since it became deflationary post-London upgrade. The deflationary model comes from a fee-burning mechanism introduced through Ethereum Improvement Proposal (EIP)-1559. A total of 2.9 million ETH has been burned since the London upgrade in August 2021, estimated to be worth $4.5 billion in today’s value.

The Merge has also seen a surge in the use of Non-Fungible Tokens (NFTs). NFTs are digital assets that are unique and cannot be exchanged for any other asset. They are often used to represent digital art, collectibles, digital assets, and even real-world assets. NFTs are becoming increasingly popular as a way to promote digital assets, and many companies are now turning to NFTs to market their products and services.

To capitalize on the growing popularity of NFTs, many companies are now hiring NFT marketing agencies to help them promote their products and services. These agencies specialize in designing and executing NFT marketing campaigns, such as creating and selling NFTs, setting up promotional campaigns on Twitter, and other web3 activities.

The Merge has also seen an increase in the use of decentralized finance (DeFi) protocols. DeFi protocols are open-source applications that enable users to interact with digital assets without the need for a centralized authority. These protocols are becoming increasingly popular as a way to access financial services such as lending, borrowing, and trading.

The Ethereum network is continuing to evolve and mature, and the Merge is just the beginning. With the Shanghai upgrade just around the corner, it is likely that the demand for ETH will continue to increase, and the amount of ETH held on exchanges will continue to decrease.

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