EURO 2024 Copenhagen
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2951. The Chronicles of Ethereum: An Event Study on EIPs

Invited abstract in session WC-31: Innovations in Digital Assets - IDA, stream Analytics.

Wednesday, 12:30-14:00
Room: 046 (building: 208)

Authors (first author is the speaker)

1. Stefan Gaman
Cybernetics and Economic Statistics, Bucharest University of Economic Studies
2. Min-Bin Lin
Institute AIFB, Karlsruhe Institute of Technology
3. Ruting Wang
Business School, Sun Yat-sen University
4. Daniel Traian Pele
Bucharest University of Economic Studies. Institute for Economic Forecasting, Romanian Academy

Abstract

The evolution of tokenomics has been greatly influenced by Ethereum (Ether), one of the most prevalent cryptocurrencies (cryptos). With the release of the Merge upgrade (EIP-3675) on September 15, 2022, Ether achieved a major turning point by transitioning from the PoW (proof-of-work) consensus mechanism to PoS (proof-of-stake). This EIP (Ethereum Improvement Proposal) marked the dawn of a new epoch in blockchain innovation, enabling the emergence of creative applications with reduced transaction costs. Meanwhile, Ether experienced a price surge prior to deployment, followed by a subsequent deflationary trend. This paper investigates the impact of EIPs such as the Merge on crypto supply and demand, discussing whether these proposals function similarly to traditional monetary policies and analyzing the characteristics of EIPs that influence substantially. Furthermore, we discuss the broader implications of technology adoption and upgrades for Ether, investigating how technological uncertainty influences pricing and functional performance. Through an event study examining Ether's EIPs, we identify event-driven opportunities and risks, providing valuable insights for investors and protocol designers (i.e. policy makers) alike.

Keywords

Status: accepted

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