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Ethereum Celebrates a Year of PoS Shift: Highlights Include $1.5 Billion ETH Burned and Significant Updates.

Ethereum's switch to Proof-of-Stake has led to a drop in its circulating supply, with Fidelity Digital Assets suggesting that ETH may be undervalued.

Ethereum's Shift to Proof-of-Stake: A Game-Changer for its Circulating Supply and Market Value

A year ago, Ethereum ($ETH) undertook a pivotal transformation, moving from Proof-of-Work to Proof-of-Stake. This transition has proved instrumental in decreasing Ethereum's circulating supply and has significantly minimized its environmental footprint.

The crucial "London hard fork" led to Ethereum transactions starting to burn ETH. The Ethereum Improvement Proposal (EIP) 1559 was a key feature of this hard fork, revolutionizing transaction fees on the Ethereum network. Instead of the erstwhile auction system, users are now required to pay a base transaction fee. They also have the choice to tip validators for speedier transaction processing.

The fallout? A whopping 980,000 ETH tokens (worth over $1.5 billion) have been burned to date. Moreover, an impressive 11.6 million ETH have been staked by 360,000+ validators. Post-Merge, Ethereum staking is perceived as a revenue fountain for crypto holders and exchanges. These platforms offer staking services, allowing users to retain liquidity via a distinct token, lock their ETH on-chain for rewards, and earn a portion of these rewards. The past month has witnessed Ethereum’s supply inflating at an annual rate of 0.03%, a shift from the -0.003% recorded in the preceding month. Without the burning mechanism, Ethereum's supply would have surged by 3.4% annually during this timeframe.

In a riveting development, Fidelity Digital Assets, the crypto arm of investment giant Fidelity Investments (boasting $4.5 trillion assets under management), suggests that Ethereum might be trading lower than its actual worth. In its "Ethereum Investment Thesis" report, it underscores that with Ethereum’s circulating supply being approximately 120 million ETH and annualized fees exceeding $6.8 billion, the price of ETH, based on a discounted cash flow model, should hover around $2,090.

This analysis coincides with prominent Ethereum whales purchasing over $400 million worth of Ethereum in just 24 hours, intensifying their ETH accumulation. This uptick in buying activity contrasts with Ethereum’s recent 0.9% dip in a 7-day timeframe, a part of a broader crypto market correction bringing the overall market cap close to the $1 trillion mark.