The devs from the Ethereum Foundation confirms that Hard Fork scheduled on 1st January will increase the inflation in ETH. The increase in inflation or the supply is expected to decrease the price of ETH further. Nonetheless, there is also a slight chance that the negative effects have been priced in already.
The delay in the launch of Ethereum 2.0 is causing a lot of difficulties for the network. The Hard Fork is necessary to execute before the network runs cold due to increasing difficulty.
The total block rewards has fallen below 10,000 ETH/daily. The normal daily rewards would likely be around 12000-13000 ETH/day.
Udi Werthemier is a Bitcoin coder and the leading figure criticizing the ETH devs while highlighting the disturbing state of the network.
What’s more frightful is that the core developers of Ethereum simply “forgot” or “miscalculated” the schedule. According to another project lead for Ethereum, Péter Szilágyi tweeted,
Nobody forgot the ice age. Someone ran some rough calculations and figured there’s ample time. The calculations were wrong. People had better things to do than double check. The moment someone did and realized the ice age is here, we acted as fast as we could.
Hard Would Set Block-times to “Normal” Again
Wethemier’s criticism has not been well received by the ETH community. However, they are not denying the premise of the attack, Iuri Matis, a programmer for the project replied to Werthemier saying,
You make it sound like the fork increases the inflation like that’s the goal, when in reality it’s just putting the block times back to *normal*.
Yes technically faster blocks (when back to normal) mean higher inflation but that’s not the goal of the fork.
The current block time for Ethereum has increase by 30% since October. Ideally, this would have been a bullish signal for ETH.
Any other given day, this would have been a normal update for the network. But under current circumstances, it can cause a dump of ETH below $100.
The supply shock is expected to increase the selling pressure by about $300,000 daily early in January. Moreover, the impending increase in the supply by about 20% post the hard fork is creating a strong sell-off already.
The Hard Fork criticism has caused a huge dent in the credibility of the developers as well. Furthermore, with numerous more hard forks and updates designated for the year, the risk around it’s project 2.0 is huge.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com