There are seismic shifts taking place in the cryptosphere as ethereum completes its transition to ethereum 2.0. one of the biggest events in this process is the triple halving.
but what exactly happens during the triple halving? how will it affect the ethereum ecosystem in the long run? And what will it mean for investors? here is the summary.
Reading: Ethereum triple halving
what is ethereum 2.0?
Before diving into the details of the triple halving, it is necessary to take a step back and understand ethereum 2.0.
Ethereum is one of the largest cryptocurrencies out there, but it has faced several major hurdles and scaling ceilings.
Ethereum, launched in 2015, currently uses proof of work (pow) as a consensus mechanism for transactions. this makes it very power-hungry and difficult to scale, limiting it to 30 transactions per second (tps).
This imposes long wait times, high fees and a disadvantage against competition such as solana, which can handle 65,000 tps.
The solution to this challenge is ethereum’s transition to proof of stake (pos) as a consensus mechanism. this consumes much less energy and time.
This transition already started in 2020, when ethereum established a parallel network running on the pos beacon chain.
In September 2022, a process called a merger will take place, where these two parallel networks will merge. once this is complete, sharding will be implemented. This increases scalability by distributing data across multiple machines on the POS network.
The tentative date is September 15.
and then there’s the triple halving.
what is ethereum triple halving?
Ethereum’s triple halving is a post-merger process. There are three elements to triple halving: burning, reduced broadcast, and staked ethos.
first, burning ethereum has been an integral part of eth since the eip-1559 update in August 2021, also called the london hard fork.
burning creates deflationary pressure on the network, increasing the scarcity of eth.
Secondly, ethereum issuance will decrease overall. According to former blockchain engineer Montana Wong, the net issuance of eth per year will fall from 4.3% to 0.4%. this equates to approximately 1,500 eth per day.
Third, there are bets.
As a result of ethereum’s staking mechanics, participants will not be able to withdraw their staked coins until at least half a year after the merger. at that point, a queue will allow them to gradually withdraw their coins. this measure also contributes to the temporary reduction of the supply of circulating eth.
In general, the triple halving is similar to the bitcoin halving, which occurs every four years. Because the planned process takes a three-part approach and is therefore equivalent to three bitcoin halves, it is called a triple halving.
the effects of ethereum 2.0 and the triple halving on the ethereum ecosystem
Globally, the transition to Ethereum 2.0 will greatly improve the scalability of Ethereum.
Transitioning to a pos model and removing miners will boost network energy efficiency by over 99%. this will give eth a decidedly greener tint.
See also: Parallel nft ethereum 50m paradigm
In addition, the demand for eth is likely to increase dramatically in the coming days. both the cut in energy consumption from the grid and the deflationary pressure stemming from the triple halving are likely to push prices up dramatically.
In terms of industry-wide performance, ethereum 2.0 will highlight the cryptocurrency’s role as a leader in web3 and defi, displacing rivals.
price speculation after the triple halving
One of the most discussed topics in industry circles is the extent to which the merger and triple halving will drive up the price of eth.
the eth deposit contract will hold 13.29 ether, with a total value of over $25 billion.
The author of the triple halving approach, nikhil shamapant, argues that ethereum is more likely to go viral than holding bitcoin due to eth’s upside potential and energy efficiency.
The official triple halving narrative finally sets a price target for eth at a maximum of $150,000. this implies a market capitalization of 16 billion dollars. such a cap will likely only remain sustainable in the short term.
techdev, an expert analyst, predicts that the next price limits within the ethereum channels could reach their upper limit at $5000.
Another prominent crypto analyst, decentrader, set a short-term target of $2400, arguing that the liquidator and sfp indicators show a large volume of stops above the current price.
Ethereum’s transition to 2.0 in general and the triple halving in particular are meant to firmly cement this cryptocurrency as an energy efficient bull asset for private and institutional investors.
Given a successful implementation of merging and sharding, the deflationary pressure of the triple halving will likely push the price of eth up, though exactly to what level remains to be seen.