ETH supply has increased by 112 000 coins since mid-April as a result of the Dencun hardfork

The March upgrade lowered fees on Ethereum-based Layer 2 networks

26.06.2024 - 08:50

209

2 min

Last updated on Aug 6, 2024

What’s new? The supply of the native token of the Ethereum blockchain is experiencing its longest period of growth since The Merge hardfork in September 2022. At that time, the upgrade changed the consensus algorithm from Proof of Work (PoW) to Proof of Stake (PoS), and introduced a mechanism to burn a portion of tokens paid as fees to maintain a deflationary model.

Ultrasound Money data

What else is known? The ETH supply has now been steadily increasing since April 14, growing by 112 000 coins, according to data from the Ultrasound Money portal. The likely cause of the inflation is the Dencun hardfork, which took place in March this year and reduced fees on Ethereum-based Layer 2 (L2) networks by 60-90%. As a result, the amount of ETH fees burned has decreased significantly.

In addition, on June 22, fees on the Ethereum mainnet dropped to the lowest level since 2020. The volume of ETH burned also dropped to a 12-month low. As a result, the average seven-day supply growth is currently at an annualized rate of 0,59%.

Although the supply of ETH has increased in recent months, it has still decreased significantly since The Merge took place. Thus, since September 2022, 1,5 billion ETH have been burned, while only 1,36 billion have been issued. Thus, the supply has decreased by 345 000 ETH, which is $1,1 billion at the current exchange rate.

At the time of writing, ETH is trading at $3389, having added 0,8% over the day. The weekly drop amounted to 4,3%, while the asset has added 49% since the beginning of the year.

Earlier this month, the developers of the BNB Smart Chain blockchain also conducted a hardfork similar to Dencun. It also reduced transaction fees by 90%.

Author: