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Ethereum Classic (ETC) Rallies Against Upcoming Halving

By Coinseek | Cryptonewsss | 24 May 2024


In recent weeks, Ethereum Classic (ETC) has experienced a notable resurgence, expanding to $33.13 and growing nearly 22% in just a week. Often considered undervalued, ETC has historically followed the rallies of its more prominent counterpart, Ethereum (ETH). This recent price hike coincides with the network’s launch of a new native stablecoin and anticipation surrounding its upcoming block reward halving.

Ethereum Classic has accelerated its gains significantly over the past few days. After months of limited price increases, ETC has gained substantial momentum. This renewed interest is largely attributed to upcoming network events, such as the impending halving of its block reward, which has drawn additional attention to the token.

Impact of the Halving Event

The current block reward for ETC is 2.65 coins, which will decrease to 2.048 ETC after the halving. The Ethereum Classic code was altered to prevent the Mining Ice Age—a legacy issue from its fork from Ethereum. While the halving event will keep ETC in the spotlight, it is not expected to have an immediate deflationary effect. ETC mining has been highly efficient, producing over 147 million tokens, compared to Ethereum’s 120 million.

Circulation and Staking

ETC is fully in circulation without staking requirements, distinguishing it from Ethereum. This means Ethereum Classic cannot host liquidity token projects like Lido DAO or build a re-staking layer like Eigen Layer. This limitation impacts the ecosystem’s ability to grow in certain decentralized finance (DeFi) areas.

Despite these challenges, Ethereum Classic recently announced the launch of Classic USD (USC), its native stablecoin. This new asset aims to enhance the liquidity of DeFi projects on the ETC network. The stablecoin’s selling point is the low transaction fee of $0.01, applicable to around 22,000 active addresses per day, with potential growth during peak usage periods.

Mining Activity and Network Security

Pre-Halving Mining Surge

Ethereum Classic mining activity has increased by over 60% since April, as miners aim to maximize their token holdings before the halving event. However, this uptick in activity also indicates that there may be substantial mining facilities that could direct resources to ETC, highlighting the ongoing risk of 51% attacks.

Market Performance and Profitability

The profitability of mining ETC will depend on the token’s market performance. At current prices, some miners can operate profitably without needing new equipment. This dynamic could influence the network’s security and stability in the long term.


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Coinseek
Coinseek

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