Ethereum Classic Tokenomics
If you don’t want to read the full article, the video below goes over everything written.
Ethereum Classic Backstory
Ethereum classic has a major history as it’s one of the oldest cryptocurrencies that is still big in the market. Many people might not know that there are two Ethereum coins and that Ethereum classic is technically the original coin. Ethereum was launched back in july of 2015 and gained some traction in the early days, then in 2016 the network received a hack which saw over $60 million stolen from wallets. This hack led to the Ethereum team splitting up into two groups. This meant that two teams wanted a coin to themselves and this is where they forked Ethereum into two coins, one called Ethereum and the other Ethereum classic. The team of Ethereum classic wants to preserve the original plan for the coin and the other team have taken it in their own direction. The main face of Ethereum, Vitalik Buterin is part of the new Ethereum team and he has gone on to push the Ethereum merge through in the past couple of weeks, this eliminated miners from the network. However, Ethereum classic has decided to stick with miners and not change the network. The Ethereum classic team describe the coin as an open, decentralized, and permissionless public blockchain, that aims to fulfill the original promise of Ethereum, as a platform where smart contracts are free from third-party interference. ETC prioritizes trust-minimization, network security, and integrity. All network upgrades are non-contentious with the aim to fix critical issues or to add value with newly proposed features; never to create new tokens, or to bail out flawed smart contracts and their interest groups. So they are basically just making sure the original vision for Ethereum is kept alive.
Ethereum Classic Tokenomics
As of writing this, the price of one coin sits at around £27 per coin. There is a max supply of 210,700,000 and so far 65% of this supply has been mined, this means there is around 137 million coins in circulating supply. This gives Ethereum classic a market cap of $3.8 billion and ranks number 22 by market cap out of all cryptocurrencies. When it comes to halving, they introduced a different system but we will go over that in detail later, just know that it halves roughly every 2.5 years. The block time is set at 13 seconds and the block reward right now is 2.56 ETC. Now there was pre mining for this coin back in 2014 for just over 10 million ETC, so around 5% of the coins were pre-mined by developers and the rest was open to the public to mine. Lastly the issues per day in usd is around $450,000, this means how much the network produces a day in dollars, it takes the (blocks per day*block reward*price per coin). Now if you would like to buy any Ethereum classic it can be found on major exchanges such as Binance, Coinbase and Gate.io.
Ethereum Classic Mining
Ethereum classic runs on the same ETHash algorithm as Ethereum used to, so this means you can mine Ethereum classic with both a graphics card or an ASIC miner if you want to. Before the merge the network was in the shadow of Ethereum and had a small amount of hashrate. Post merge it has received a large spike as everyone switched their mining rugs over to classic as its the most profitable coin to mine.
When we look at the hashrate chart we can see that it sat at around 20–30TH/s and after the merge it shot up to 250TH/s, now it has settled down further at 160TH/s. At this hashrate it becomes very unprofitable for miners that are using GPU’s as they are less efficient than ASIC miners. So for the most part I think this hashrate is made up of ASIC miners. Therefore if you’re looking to mine Ethereum classic then I would start to look at ASIC miners to buy, the list of these can be found at asicminervalue.com and the main miners you’re looking for are iPollo, Jasminer and Bitmain. However if you do want to mine with a GPU it has to be above 3GB in memory which most cards nowadays will have.
As mentioned earlier there is a halving schedule for Ethereum classic and it works at a different rate to other coins. The coin is set to reduce the block reward every 5 million blocks mined. The reward is not halved but reduced by 20% of the previous block reward. Every 5 million blocks works out to around a halving every 2.5 years. As we can see on this chart there has been 4 block reductions with one happening recently this year in April and the next is set to happen in 2024 which is actually around the same time as Bitcoins halving. If you want to learn about mining Ethereum classic or how to mine it then I have various videos on my channel going over the profitability of this coin. The only thing that Ethereum classic doesn’t have is a thing called block MEV, this is a reward put onto main Ethereum blocks that gives miners more block rewards if the network has high transactions, this was actually very influential to mining on the main Ethereum network. When big NFT’s dropped on the Ethereum network, the MEV on blocks would be very high and miners would receive bigger rewards. I don’t know how they would implement MEV into the classic network but it would help miners make more profits on the network.
Ethereum Classic Network Security
As of today the Ethereum classic network has received 9 hacks according to their history page. Some of these were white hacks which are done to show the team where flaws are in the code. These types of hacks are harmless as they don’t hurt the network. However some of these hacks are harmful like the 2016 DAO hack which saw millions lost in ethereum. The most recent one was in 2020 and was a 51% attack which happens when someone holds over 51% of the network hashrate, they can then create their own blocks and send to certain addresses. With the network being hacked it leaves a stain on the Ethereum classic coin and this is one of the many reasons why this coin has not had as much adoption as the main Ethereum coin. They have obviously updated the network so that these hacks can’t happen again but most of these hacks are due to code that was written a while ago and so they have not stood the test of time. Every hack that happens will set back a network a little bit as we have seen with the Solana hack earlier this year. So let’s hope the network doesn’t have anymore hacks and stays as secure as possible.
Ethereum Classic Dapps
With this coin being very old, it has allowed for some innovation in dapps overtime and it was one of the first coins to run dapps. When looking on the classic website we can see that there are vast options suchs as metaverses which are also integrated with NFT’s. Furthermore there are NFT marketplaces where you can buy, mint and sell digital art. They have a very useful interoperability section which is basically chain technology that allows for value and data to be shared between other blockchains, this aims to connect every chain together to form web 3.0 that many people say is the future. Next they have identity dapps which are a way of verifying the identity of an object or person if they choose to add it to the chain. In the future this could be used on a large scale for passports as they can’t be faked if they are on a blockchain. This eliminates fake passports or driver licenses for government checks and the like. Last dapps they display are finance, these are the biggest apps on most networks as they are integral to cryptocurrencies. They have De-Fi, DEX’s and DAO’s which serve various different functions.
Conclusion
Overall ethereum classic is a great coin which sadly has been plagued by hacks, but hopefully it’s the last of the hacks and we can start to see more adoption. If you want to learn more about eth classic then head over to their website and have a read through their guides. Hopefully you guys got a good idea on whether or not to use or invest in this coin.
