Still Ultrasound Money? Here’s How Much Ethereum Supply Has Inflated Since Dencun

Ethereum’s status as an ultra-money system is becoming increasingly questionable as the days go by, especially as its supply continues to increase at a high rate.

Since mid-April 2024, about a month after the Ethereum network underwent the Dencun upgrade, more than 112,000 ether (ETH) have been transferred. He added To the market at the fastest daily rate after the merger.

Dincon traces

Over the years, Ethereum has seen many developments that have led to the network we know today, and the merger in September 2022 saw it transition from a Proof-of-Work consensus network to a Proof-of-Stake network.

In mid-March, the Ethereum network underwent another update that reduced transaction fees for Layer 2 networks by about 4-fold and enhanced the blockchain’s scalability by expanding its capacity. Duncon submitted nine proposals to improve Ethereum, including EIP-4844, which implemented initial data sharding, a mechanism that allowed the creation of data blocks.

Using blobs, layer 2 solutions like Arbitrum, Optimism, and Polygon are able to send transaction data to Ethereum for collective settlement within a dedicated blobspace without additional overhead.

It is worth noting that Ethereum implemented some upgrades to ensure it remained in a deflationary state before Dencun came along. One such improvement was the London upgrade that took place in August 2021. London introduced a mechanism that removed ETH from circulation with each transaction by burning a portion of the network’s gas fees. The merger reinforced this approach to deflation and reduced the inflation rate of ETH by 90%.

ETH is now inflationary

Since Dencun, Ethereum transaction fees have been lower, meaning less ETH has been burned. On-chain analysts believe that Ethereum is no longer experiencing deflation, as the new supply of Ethereum has become positive. The amount of fees burned on Ethereum is no longer positively related to high network activity; Lower fees are burned regardless of the number of users transacting on the network.

However, the total supply of ETH since the merger has decreased significantly, with a total decrease of 345,000 ETH. About 1.36 billion ETH was issued, but more than that was burned.

As the inflation rate of Ethereum increases after Dencun, the purchasing power of ETH is declining, which may have a negative impact on investors.

Meanwhile, ETH He deserves $3,374 at the time of writing, down 4.8% in the past week in relation to the decline in the cryptocurrency market.