Ethereum network’s growth of activity has caused the supply of ETH to fall to its lowest level since August 2022

The number of active addresses and transaction volume reached a yearly peak

18.03.2024 - 10:10

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What’s new? At the end of last week, activity on the Ethereum network showed a significant increase, and several on-chain metrics set highs over the past 12 months. On March 17, the number of active and new Ethereum addresses jumped to yearly highs of 563 550 and 121 800, respectively. In addition, on the same day, the daily transaction volume exceeded $7,2 billion.

Material by The Block

What else is known? By the middle of last week, the supply of ETH had reached its lowest since August 2022, according to data from analytics platform CryptoQuant. On September 15, 2022, the Ethereum network switched from the Proof of Work (PoW) consensus algorithm to Proof of Stake (PoS) as a result of The Merge hard fork, and implemented a mechanism to burn coins paid as transaction fees, making ETH a deflationary asset.

Currently, the rate of decline in ETH supply is at its highest since last May. Over the past 30 days, the asset’s supply has declined by 0,8% year-over-year, while the figure was only 0,246% right after The Merge upgrade.

As explained by Julio Moreno, the head of research at CryptoQuant, the increase in activity on the Ethereum network has led to an increase in transaction fees and therefore increased the amount of burned ETH paid as fees. He added that the number of daily transactions has peaked since May 2023. For instance, the 7-day moving average (7DMA) reached the 1,26 million mark on March 17.

Since The Merge, over 1,56 million ETH have been burned, while less than 1,12 million have been issued, resulting in a net decrease in the supply of over 446 000 coins, which exceeds $1,598 billion at the Binance exchange rate as of March 18, 08:45 UTC, as of March 18.

In addition, on March 13, the Ethereum blockchain saw the Dencun hard fork, which reduced fees in the Layer 2 (L2) networks based on it by 60-90%. Against this background, the daily number of transactions in L2 Base updated the historical maximum above 2,1 million.

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