Ethereum's Transition to Proof-of-Stake: Deflationary Asset Milestone and Concerns Over Decentralization

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Ethereum's Transition to Proof-of-Stake: Deflationary Asset Milestone and Concerns Over Decentralization

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Since Ethereum's shift to Proof-of-Stake, nearly 1 million ETH has been burned, marking a significant milestone in making ETH a deflationary asset and reducing the network's carbon footprint. Although the network has witnessed positive changes such as decreased new Ether issuance and increased staking participation, concerns about decentralization have emerged. The Merge, which occurred on September 15, 2022, fundamentally altered Ethereum's tokenomics, resulting in a significant decrease in daily Ether issuance and the burning of ETH through transaction fees. Currently, there are almost 300,000 fewer ETH in circulation compared to before The Merge. Additionally, the rise of liquid staking tokens and the dominance of Lido in the sector have fueled worries about centralization and potential governance attacks. Ethereum's chief scientist, Vitalik Buterin, has called for measures to address this issue, suggesting that staking providers controlling over 15% of staked ETH should increase user fees to discourage further dominance.