Ethereum's Proof-of-Stake Transition Reduces Ether Supply by $134.5 Million

The impact of Ethereum's switch from proof-of-work to proof-of-stake consensus mechanism has become clear 200 days after the transition. The implementation of The Merge reduced the rewards given to those who run the network and introduced a burning mechanism that reduces the supply of ether. As a result, the total supply of ether has decreased by 75,000, which is worth $134.5 million and represents an annual decrease of 0.114%. In contrast, if The Merge had not occurred, the total supply of ether would have increased by 2.2 million, valued at over $4 billion in current prices.

However, The Merge resulted in staked ether becoming temporarily unable to be unstaked. Ethereum's Shanghai upgrade, which will be implemented on April 12, will allow staked ether to be withdrawn, although not all at once. Staking pools will determine when rewards are released, and Coinbase plans to accept unstaking requests 24 hours after the upgrade. Nevertheless, the exchange warned that demand for unstaking will be high, and it may take weeks to months for the protocol to process the requests. Lido Finance also expects stETH withdrawals to be available on the mainnet by mid-May after code audits and a two-week safety margin. However, technical on-chain limitations mean that only 16 partial withdrawal requests can be processed every 12 seconds, leading to a potentially lengthy queue. Full withdrawals may also take a relatively long time