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Why is ETH Expensive (Why is ETH’s earnings getting lower)?

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Why is ETH expensive? Editor\’s Note: This article is from an Ethereum enthusias

Why is ETH Expensive (Why is ETHs earnings getting lower)?

Why is ETH expensive? Editor’s Note: This article is from an Ethereum enthusiast (ID: ethfans), Author: Vitalik Buterin, Translation & Proofreading: Min Min & Ajian, Authorized reproduction by Odaily Planet Daily.

The value of ETH depends on its issuance method, use cases, and user experience. If the price of ETH is below $10, it will lead to a large number of transactions being packed into blocks and generate new rewards. Conversely, there will be a large amount of ETH transferred to exchanges and other operations. So, why is the price of ETH so high? Let’s find out below. What is ETH? Essentially, it is a decentralized digital currency system built on the Ethereum blockchain. It allows anyone to create their own cryptographic assets through smart contracts without the need for third-party involvement. Therefore, ETH is an application-oriented token similar to Bitcoin. However, ETH is not a cryptocurrency developed by an entity or organization, but a digital token supported by a specific application or protocol. ETH has many uses, such as buying goods and services – such as virtual land leasing and real estate ownership in games, and paying fees, etc. Due to these characteristics, these digital tokens have different functions such as immutability, transferability, and verifiable scarcity. What is ETH? In the past few years, as more and more people have started to pay attention to this topic, Ethereum has gradually become one of the top five public chains in terms of global market value. However, in recent months, there has been no increase in activity on the Ethereum network. Although the Ethereum 2.0 testnet Medalla has been launched, the platform still needs to be upgraded to the latest version to run. Although some node operators still hope to ensure secure maintenance and prepare for future updates, all of this has to wait for “time to prove”. According to Etherscan’s data statistics, in January 2019, the Ethereum network had a total transaction volume of over 300 million US dollars. To address this issue, the Ethereum Foundation has launched a new project called “The Rebase”. The project aims to establish a more flexible, seamless, and scalable network. The Ethereum Foundation plans to launch the mainnet by the end of this year to achieve its goals. In addition, the Ethereum Foundation will also allocate 1 million ETH to client teams, half of which will be used to incentivize the development and maintenance of client teams and the other half will be used to fund community construction.

Why is ETH’s earnings getting lower?

According to Coindesk’s report, the Ethereum network is currently facing severe negative price fluctuations and network congestion. The low trading volume of ETH in the past few days indicates that some people think that the value of Ethereum is overestimated. According to data provided by researcher Santiment, despite the recent price surge, the network of this protocol still has a lot of cost consumption. Due to the continuous rise in gas fees, the total return of ETH has fallen by over 15% (about 12% of its income) in the past week. Additionally, due to reduced trading activity and rising transaction costs, the ETH network has also suffered losses, and the amount of ETH they currently hold has dropped from its historical high in January to the lowest level now.

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