A popular pseudonymous crypto analyst says a proposed Ethereum upgrade would significantly boost the price of the second-largest cryptocurrency.
The analyst, who goes by the name Pentoshi, says the launch of the Ethereum Improvement Proposal (EIP)-1559 would ensure the price of ETH moves above the $1,000 mark next year.
“EIP-1559 in 9 months. ETH has the possibility to become deflationary. Current issuance is 4% per year, same as BTC. ETH 2 will [be] bringing [issuance] down to 1.5%. A halving of its own just without the label. ETH is needed for everything. Gas. DeFi. Alts. Staking. Uniswap. $1,000+ in 2021.”
First proposed back in 2018, the EIP-1559 is designed to drastically restructure the fee mechanism of the ETH network. With the EIP-1559 upgrade, all transactions will have a standard fee called a basefee, which is the same for all users.
Ethereum creator Vitalik Buterin says the new fee mechanism offers a couple of benefits.
“Simplicity of wallet development (no/less need for complex fee estimation strategies). Privacy (less need to choose fees means less opportunity to reveal bits of info about yourself).”
The EIP-1559 would also have a deflationary mechanism as Buterin presents two options where transaction fees would either be burnt or deposited into a long-term mining pool.
Crypto intelligence platform Messari revealed last month that Ethereum fees have significantly outpaced Bitcoin fees.
“Ethereum fees have been higher than Bitcoin fees for 2 months straight. It’s longest streak ever.”
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