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Analyst: EIP-1559 could catapult Ethereum above $ 1,000 in 2021

  • Ethereum 2.0 is seen by experts as a catalyst for a rising price in 2021.
  • In addition, EIP-1559 could also spark a strong upward trend, as when implemented the network receives a deflationary mechanism.

The price of Ethereum rose sharply after the announcement of the official start of the deposit contract on November 4th and was able to stabilize around the USD 460 mark. In the last 24 hours, ETH has seen an increase of 2.72% to a price of USD 461.80. Market capitalization is $ 52.71 billion.

The immediate start of Ethereum 2.0 is seen as a catalyst for a soon rising ETH price. So far, 52,993 ETH of 524,288 ETH have been paid in so that the Beacon Chain can start as planned on December 1st, 2020. The community remains optimistic that this start date can be kept. In addition to these upcoming milestones, the analyst Pentoshi also sees great potential in EIP-1559, which could catapult the ETH price to over USD 1,000 next year.

ETH price to over 1,000 USD in 2021

The EIP-1559 is a proposal to change the fee mechanism which is used to validate transactions on the Ethereum blockchain . The current model works just like Bitcoin by paying a fee that encourages miners to validate a transaction. The higher the fee set, the faster the transaction will be validated.

EIP-1559 proposes to change the model in such a way that a specific parameter for the base rate is implemented, which is calculated by the protocol. For each completed transaction, part of the fees should be distributed to the miners, the other 50%, the so-called “space fee”, should be burned.

This would give the Ethereum network a “deflationary mechanism” that could have a positive long-term effect on the course of ETH. The more the network is used, the more ETH would also be burned. Industry experts such as Ethereum Core Developer Eric Conner note that the proposal would benefit all investors and not only ETH Wale would benefit from it.

Pentosi claims , if the proposal is accepted and implemented, that the annual output would be reduced from 4% to 1.5% and that this alone could increase the ETH price significantly:

EIP-1559 in 9 months. ETH has the opportunity to become deflationary. The current spending is 4% per year, just like BTC. With ETH 2 it will decrease to 1.5%. Halving their own just without the label. ETH is needed for everything … gas. DeFi. Alts. Staking. Uniswap … $ 1,000 + in 2021.

Ryan Sean Adams has a similar opinion, who explains on Twitter that Eth2.0, the ETH staking and many other technical developments are not yet “priced in” in the current price.

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