I write and talk about The Merge a lot - and for good reason - it’s the largest upgrade to the Ethereum network in its entire history pulling together 100’s of researchers & developers as well as many years of hard work. And while The Merge itself is a grand technical achievement, there’s a large economic part that plays a role in it too - and in today’s piece I want to go over some of the major economic merge-related themes.
One important thing to note about the first point in my tweet is that what Ethereum is trying to do here has not been done by any large crypto-network before - namely, hot-swapping out a Proof of Work consensus mechanism for a Proof of Stake one. Given that this is an unprecedented event, it is sure to bring with it a lot of media coverage - especially around that 99.98% energy use reduction - as the mainstream narrative around Proof of Work is currently very bad and many people believe that PoW is horrendous for the environment.
The 80-90% issuance reduction coming with The Merge has been talked about for quite some time (I first mentioned it in January of 2019) and it has come to be known as the “triple halving” event (a term coined by SquishChaos). Put simply, issuance is being reduced by this amount because Ethereum Proof of Stake is a much more efficient system whereby block rewards are only paid out to the active validator set which works out to be only a small percentage of the circulating ETH supply. This is in stark contrast to Proof of Work where the issuance rate is currently over 4% and miners are forced to sell lots of their ETH to pay their very high bills. Post-merge, these costs collapse as stakers/validators only have to worry about a minimal electricity/hardware cost and possibly taxes. Oh and as a bonus, ETH will be net deflationary post-merge as long as gas prices are above 20 gwei.
A little over a year ago I started The Daily Gwei YouTube channel after having a few months worth of success writing my daily newsletter of the same name. Since then, the channel has grown to over 14,000 subscribers and has thousands of daily watchers/listeners across both the videos and the podcast. I am honestly so humbled by the support I’ve gotten - I never thought this many people would enjoy listening to me go on about Ethereum for 30 minutes every week day - but here we are!
My goal with The Daily Gwei has always been to provide unedited, unfiltered, raw and completely free Ethereum educational updates and content as my way of giving back to a community that has given me so much. It warms my heart every time someone reaches out and thanks me for educating them - especially those who say I’ve changed their lives - it’s just an indescribable feeling.
So to celebrate The Daily Gwei YouTube channel’s 1 year anniversary, I teamed up with the extremely talented _kitteh to create an NFT that immortalizes the room that I broadcast from and one that I have called home for over 20 years now. This NFT will hold a very special place in my heart because in a couple of weeks I’m moving into a new house and a new study so I’m very thankful that I have a piece of memorabilia to always look back on. It also acts as a way for me to “share” a piece of the room that you’ve all watched me sit in for the last year or so - after all, The Daily Gwei is a community that is much larger than just me!