Ethereum’s ratio plunged by close to 20% at some point, down 10% now to 0.054BTC, starting this Friday when developers decided to delay yet again the difficulty bomb.
“In short, we agreed to the bomb delay,” Tim Baiko, the chair of ethdev calls, stated. It will be delayed by 2.5 months with the fork expected by the end of this month.
That puts us to mid-September for the difficulty bomb to kick in again, raising blocktimes initially slowly, until eventually they reach a point where the network is unusable.
Currently block times have almost not risen at all and that’s how it will stay now until September, with this difficulty bomb implemented to force the transition to Proof of Stake (PoS) by giving Proof of Work (PoW) miners no choice on the matter.
The merge isn’t delayed though, according to Beiko. “I still feel like the (late) August-Nov range is roughly right.”
Ben Edgington, an eth2 dev, was more critical, stating: “We say it won’t delay the Merge. I sincerely hope not. Every extra week on PoW generates close to 1 Million tonnes of CO2 emissions.”
The decision was controversial, and seeing how well the Ropsten testnet merge went, arguably they could have live merged this June already after months of testing on Klin, which has surpassed the mainnet in transactions, and months of shadowforking, because they seem to have finished really, and that’s been the case for weeks now as far as we can tell.
But they want to be extra careful, with a tentative target of August given which we always assumed to mean September.
Now with this delay, October is the latest. That may be the depth of bear anyway so no one would hold back at that point.
Every day delayed means $30 million burned on miners. Ethereum currently has a relatively high inflation rate as well of 4%, compared to bitcoin’s 2%. So its ratio is acting just like last time: absolutely rekt.
The merge will change that because issuance will drop to zero for six months until staking eth are unlocked, and with fee burning it will be below zero.
But it may well be next summer when that all starts to be felt as the new supply dynamics are ‘cleared’ and the unlocking FUD gets digested.
Which from a price dynamic means they missed an opportunity to get a proper bounce this summer by being too cautious in wasting time when they’re pretty much finished (although to be fair to them no one wants to risk blame due to some bug) and the upgrade will now go through during what may be the depth of bear, which may well mean no one will care.
Yet the maths of supply and demand don’t care if anyone cares. So this difficulty bomb delay and even their desire to now merge no later than October doesn’t make too much of a difference to us because it doesn’t really change anything, expect the ratio could have kept up a bit better.