Developer Thinks The Ethereum “Ultrasound Money” Narrative Exaggerated: Is It?

2 Mins read

The term “ultrasound money” has been thrown around quite a bit in the Ethereum (ETH) community, often describing the network’s potential to become a deflationary asset with better tokenomics than Bitcoin (BTC). While some proponents believe this narrative is well-founded, others argue it is overstated and based on overly optimistic assumptions.

Is The Ethereum “Ultrasound Money” Narrative Exaggerated?

In a post on X, antiprosynthesis.eth, a developer, challenged the “ultrasound money” narrative, arguing that it is often accompanied by jargon that may conceal the reality of Ethereum’s monetary policy. Specifically, the analyst believes the narrative is a bit “overboard” and loaded with “a bunch of pseudo-scientific hocus pocus” that might mislead ordinary users.

Ethereum versus Bitcoin issuance rate | Source: antiprosynthesis.eth via X
Ethereum versus Bitcoin issuance rate | Source: antiprosynthesis.eth via X

Adopting a neutral view, antiprosynthesis.eth, Ethereum’s monetary policy is, most importantly, designed to be sustainable without the dangerous pitfalls of hyperinflation or excessive deflation. The developer argues that striking a balance in token emissions is critical. 

In Ethereum’s case, this is achieved by burning a portion of gas fees. Following the activation of EIP-1559 in 2021, the first smart contracts platform changed its bidding system, creating a system where the network sets a base fee with the allowance for a user to “tip” the validator. The base fee is burnt, helping the network become deflationary–or, as researchers argue, sustainable.

Ethereum price trending upward on the daily chart | Source: ETHUSDT on Binance, TradingView
Ethereum price trending upward on the daily chart | Source: ETHUSDT on Binance, TradingView

In Bitcoin’s case, the network will continue to issue new coins to miners until all the 21 million BTC are distributed. This will be more than a decade from now. To achieve this, the Bitcoin protocol has been halving mining rewards. In the early years of Bitcoin, miners received 50 BTC whenever they confirmed a block of transactions. However, after the network halves in April, miner rewards per block will fall to 3.125 BTC.

The Road To Sustainability, Ethereum’s Issuance Rate Continues To Fall

Comparing the two approaches, the Ethereum developer notes that each system has its mechanism of ensuring its tokenomics are sustainable. The analyst adds that the “ultrasound money” narrative championed by supporters may be exaggerated and, to some degree, an overly optimistic assessment of ETH’s ability to be deflationary.

As of January 10, Ethereum has destroyed over 3.9 million ETH since the implementation of EIP-1559 based on the Ultra Sound Money data. During this time, the network issued more than 6.9 million.

ETH burning | Source: Ultrasound Money
ETH burning | Source: Ultrasound Money

This confirms that Ethereum has been burning more ETH recently; it remains inflationary, to a smaller degree, like Bitcoin. Still, unlike Bitcoin, Ethereum’s issuance rate has been dropping steadily due to increased token burning.


1409 posts

About author
Harry is a crypto enthusiast and experienced trader with a track record of success. With a deep understanding of blockchain technology, he has analyzed market trends and identified profitable opportunities, resulting in impressive returns. Harry 's expertise lies in developing effective trading strategies that leverage the potential of cryptocurrencies. Through his articles, guides, and educational resources, he shares his insights and knowledge, helping individuals make informed trading decisions. With a keen eye for market patterns, Harry has navigated the volatile crypto landscape with confidence. Stay tuned for valuable perspectives and expert advice from Harry as he contributes to the Ailtra platform.
Related posts

Indonesia's presidential elections pose uncertainty for the thriving cryptocurrency industry

1 Mins read
Indonesia, has emerged as a formidable player in the global cryptocurrency space in recent years. However, the nation’s upcoming general elections in…

Understanding the Cryptocurrency Boom - Dogecoin Climbs Due to X Payment Integration, While Stellar and BNB Also Experience Growth

1 Mins read
The cryptocurrency market has been experiencing notable gains over the past few days. This is led by an unexpected and surprising spike…

Crypto Entrepreneur Charged with Defrauding Investors Out Of $150 Million Through Marketing Scheme

1 Mins read
Federal prosecutors have charged a German businessman with securities fraud, wire fraud and money laundering for allegedly scamming over 150 investors out…

🚀 Ailtra Crypto Bot Earned $8.9M Million in 7 Months with 0% Loss!

🚀 Ailtra generated $7.4 in 7 months only!

Unlock 20-75% Monthly Returns & Get $100 FREE!

Meet Ailtra Bot! Launching on 31st March an AI Crypto Bot boasting 20%-75% monthly gains and $7.5M earnings in 7 months. 💸Secure a FREE $100 bonus and up to $20K potential via referrals every month. 🎉Only 1,000 spots are available in first phase – claim yours fast! 🔥 will not disclose your account information to any 3rd parties.