Rising gas fees on the Ethereum network were one of the key agenda items this year. Increasing demand, especially in the NFT field, has helped us better understand the seriousness of this problem. So, will Ethereum be able to get rid of these problems next year? What awaits ETH investors in 2022?
ETH 2.0 Upgrade!
Despite high gas fees, many layer1 blockchains have shone this year. Of course, it was not surprising that alternative solutions emerged while the ecosystem was growing so fast. Promising projects such as Solana and Avalanche, described as Ethereum killers, have rapidly expanded their ecosystems.
Ethereum has already laid out a plan to turn itself into a deflationary network that aims to solve many of its problems. This was done with the introduction of the Beacon chain last year to allow Ether staking, along with the introduction of EIP-1559, which started a combustion mechanism in the system.
Ethereum advocate Anthony Sassano stated in a recent podcast that Ethereum’s monetary policy is designed to “allow it to be sustainable while adding value to ETH holders.” This would be done by minimizing the amount of value wasted in the network by reducing miner fees that Sassano believes are currently overpaid.
The Kintsugi public testnet was launched by Ethereum last week and is one of the last networks released before the network fully transitioned.
2022 Ethereum (ETH) Price Prospects!
When the transition to ETH 2.0 is completed, the rate of ETH issuance is expected to decrease with the increase in the amount of burning. According to Sassano, a deflationary process will begin, we experienced this for a few days in 2021.
“Even with continuous issuance with no fixed caps, there is still an Ethereum that is on its way to being a net deflationist. And you don’t have to worry about the security of the network.”
Referring to the increase in fees, Sassano made a Bitcoin comparison:
“All you can do on the Bitcoin network is to transact with BTC, there isn’t a lot of demand to do that… Whereas in Ethereum layer one you have a million reasons to transact on the network and that’s reflected in the fees”.
With the transition to the PoS algorithm, miners’ earnings and transaction costs will decrease. Validators aren’t the only ones profiting from Ethereum’s transition to PoS. This is also bullish for the network, according to DeFi investor Cyrus Younessi.
In the same podcast, DeFi investor Cyrus Younessi said:
“When an asset suddenly starts to yield an additional 20%, it definitely means that people will pour money into it by borrowing money from other capital assets.”
Considering all these details, we can assume that the Ethereum price can stay above $3,500 in 2022, even in the worst-case scenario. But the more ambitious you are about the future, the more wrong you will be. That’s why it’s better to be cautious and be prepared for the worst-case scenario, we all experienced the days when Bitcoin fell to $ 20,000 and then to $ 6,000.