Ethereum’s supply has been inflating for 73 days straight
The supply of new Ether ( ETH ) has been in its longest inflationary spell since the Merge in 2022, and the blockchain’s Dencun upgrade in March seems to be responsible.
The supply of ETH has been gradually inflating, with over 112,000 ETH being added to the overall supply since April 14, according to Ethereum data dashboard ultrasound.money.
Much of this inflationary activity can be traced back to the Dencun upgrade which went through on March 13, which introduced nine Ethereum Improvement Proposals (EIPs), including EIP-4844 which appears to be the reason for the inflation.
EIP-4844 introduced “blobs” — a mechanism that allows transaction data to be stored separately and temporarily, reducing the fees paid for block data on Ethereum layer 2 networks.
Additionally, Dencun introduced proto-danksharding , which saw more efficient data availability for block space on the Ethereum mainnet.
Related: Ethereum futures markets suggest rally to $3.7K is highly unlikely
While this saw a massive reduction in the cost of executing transactions on Ethereum layer 2 networks such as Abritrum and Optimism , the total amount of ETH being burned on the mainnet as a result has been reduced significantly.
While ETH supply has flipped inflationary in recent months, the total supply of ETH has still decreased significantly since The Merge.
In total, more than 1.5 billion ETH has been burned since September 2022, while 1.36 billion ETH has been added, resulting in an overall supply reduction of 345,000 ETH, equating to just over $1.1 billion at current prices since the switch to a proof of stake consensus mechanism.
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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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