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Comment by hackernudes | Hacker News Reader

I don't understand what you mean. Stakers get ETH "for free" and therefore they crash the price? But the demand for ETH will still be there just like it was for mining.

I don't really understand how Ethereum works very well. They are trying to tweak the ETH generation to make the merge work (see the ultra sound money memes). Just because stakers don't have to work hard doesn't mean ETH will crash.

The whole thing does kind of seem hand wavey and magicky (compared to proof of work, I mean) but I've had a hard time finding resources that explain how it works simply.

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Ok, a real life comparison, lets say there are 1000s of real life mines around the world that currently mine gold for say $50 per gram, but suddenly a processing technique lowers that cost for all miners to $0.50 per gram. In any normal market the price of gold should trend down.

You would be right if it continues to be proof of work. More miners would mine more ETH.

But this is not the case, the 'mined' ETH will come from proof of stake. Some people with more than 32 ETH and an online server will keep the engines rolling and get 5% in return for their service.

The less power is because the electricity is used for serving instead of mining.

How about this - X units of gold are produced each year. Then all of a sudden it's cheaper to mine gold, but magically still only X units of gold can be mined each year. What happens to the price of gold? What if less than X units are mined?

From what I understand, ETH issuance rate is going to go down after the merge.

Nope - price is a function of supply and demand.

In your hypothetical, demand stays the same. The supply stays the same, too - because the gold mines are still limited to the same amount of gold they get out of the ground.

So long as the amount of gold is mined unchanged, the fact that the processing is cheaper makes the mine more profitable but doesn’t change the price of gold.

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