Hey there, meme token fans and blockchain buffs! If you're into the wild world of crypto, you've probably heard of ETHZilla – that fun, Godzilla-inspired project born on Ethereum. Well, they've just kicked off something pretty cool: ETHZilla's Ethereum School. Every Friday, this roaring mascot is dropping knowledge bombs about Ethereum that you might not know. And the first lesson? It's all about Ethereum's monetary policy. Let's break it down in simple terms, no PhD required.

Why Ethereum's Supply Isn't Like Bitcoin's

Bitcoin has a hard cap at 21 million coins – that's its big selling point for scarcity. But Ethereum takes a different path. Instead of a fixed supply limit, it uses an issuance cap tied to network security. This means new ETH is created in a way that keeps the blockchain safe and humming along.

The key formula here is straightforward: The maximum annual ETH issuance equals 166.3 times the square root of the total staked ETH. In math terms, that's Max Annual ETH Issuance = 166.3 × √(Staked ETH). What does this mean? As more people stake their ETH to validate transactions, the network issues a bit more ETH to reward them. But if staking drops, so does the issuance. Even in the extreme case where every single ETH is staked, the issuance rate tops out at about 1.51% per year. That's pretty low, keeping inflation in check.

The Magic of Fee Burning with EIP-1559

Ethereum doesn't just mint new coins; it also destroys some through a process called fee burning. This kicked in with EIP-1559, an upgrade that changed how transaction fees work. Now, a base fee from every transaction gets burned – poof, gone forever. The more activity on the network (like trading NFTs or swapping tokens), the more ETH gets burned.

Since "The Merge" on September 15, 2022 – when Ethereum switched from energy-hungry mining to staking – this burning has outpaced new issuance most of the time. The result? A net issuance rate of just around 0.139%. That's deflationary vibes, folks, making ETH potentially scarcer over time.

Who Gets the New ETH?

All that freshly issued ETH goes straight to validators. These are the folks who stake their ETH to secure the network, proposing and verifying blocks. It's like a reward for keeping Ethereum honest and operational. If you're holding ETH, staking it not only helps the ecosystem but can earn you some extra coins too.

ETHZilla promises more lessons every Friday, so stay tuned if you want to level up your Ethereum know-how. Whether you're a meme token trader or a serious blockchain dev, understanding these basics can give you an edge in the crypto game. Got thoughts on this? Check out the original thread on X and join the conversation.

In the meme world, knowledge is power – or at least, it helps you avoid getting rekt. Keep learning, and may your portfolios roar like ETHZilla! 🦖