Another Ethereum classic (ETC) fifthening has taken place – welcome to Era 4!

Ethereum classic logo

On April 26, 2022, the 15.000.000th block of the Ethereum Classic (ETC) was crossed, after that the network entered Era 4. What does it mean and how will it affect the value of the ETC?

5M20 policy: operation

As you know, the Ethereum Classic monetary policy, also known as 5M20, is based on the principles of a fixed total supply and an emission schedule.

Currently, 67% of coins of the total supply, which amount to 210,700,000 ETC, are in circulation. Every 5,000,000 blocks, a block reward reduction of 20% is provided by the emission schedule.

A similar principle forms the basis of the Bitcoin network operation, with the difference that the next era of Bitcoin implies a halving of the block reward. Therefore, unlike Bitcoin’s “halving”, the new era of Ethereum Classic is denoted by the term “fifthening”. Comparable to Era 3 where mining reward was 3.2 ETC per block, Era 4 has decreased it to 2.56 ETC.

However, unlike halving, which happens once every 4 years, fifthening occurs much more often. Thus, the next era of Ethereum Classic is expected in May 2024. The developers claim that Ethereum Classic will catch up to Bitcoin level inflation by 2032. 

The 5 currently known ETC eras are described in the table below:

ETA DateDate5M20 eraBlockBlock rewardTotal era emission
30 July 2015Era 11ETC 5ETC 25,000,000
December 201711 December 2017Era 25,000,001ETC 4ETC 20,000,000
March 202017 March 2020Era 310,000,001ETC 3.2ETC 16,000,000
April 202226 April 2022Era 415,000,001ETC 2.56ETC 12,800,000
May 2024Era 520,000,001ETC 2.048ETC 10,240,000

Undoubtedly, this list is not comprehensive and the network will continue to operate long after the end of Era 5. The 5M20 timeline is designed to last until the 2060s. Moreover, according to ETC developers’ plans, about 99% of all coins will be mined by 2065.

ETC fifthening diagram

Results of the ETC fifthening: long-term and short-term perspective

The long-term goal of the 5M20 monetary policy is obvious: over time, the available liquidity of ETC will decrease (just like Bitcoin). Thus, the Ethereum Classic is a deflationary (rather than inflationary) asset that is programmable sound money, value of which should rise gradually.

As for the short-term results of entering Era 4, all we see now is a significant decrease of miners’ earnings. The reason is that in April 2022, the Ethereum Classic price dropped from $47 to $27, and still continues to go down. Even an event such as fifthening will not reverse this process. Thus, ETC is starting to lose ground to competing coins in terms of mining profitability.

Certainly, Ethereum Classic price is affected not only by events within the network, but also by the overall situation in the cryptocurrency market – and it is far from being rosy due to the global instability. However, many continue to believe in the prosperity of ETC and predict this coin the “moonshot” in the near future.

Well, we’ll have to wait and see.

 

About Angela Keith 13 Articles
Angela Keith is a mass communications specialist who has worked in this field for over 5 years. In addition to being a writer, she’s very interested in exploring blockchain technology and believes that it could be a game changer in the global economy. She also invests in various coins using his knowledge of the crypto market.

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