The issuance of fresh Ether is currently experiencing its most prolonged period of inflation since the Merge in 2022, with the blockchain’s Dencun update in March appearing to be the driving factor behind this trend.
In line with data from ultrasound.money, the supply of Ether (ETH) has been steadily expanding, with more than 112,000 ETH introduced into circulation since April 14. The surge in ETH supply can be largely attributed to the implementation of the Dencun upgrade on March 13, which brought with it nine Ethereum Improvement Proposals (EIPs), notably EIP-4844, identified as a key contributor to the inflationary trend.
EIP-4844 ushered in the concept of “blobs,” a feature enabling the separate and temporary storage of transaction data, thereby reducing the fees associated with block data on Ethereum’s layer-2 networks. Moreover, the Dencun update introduced proto-danksharding, enhancing data availability efficiency within the block space on the Ethereum mainnet.
Despite witnessing a significant decrease in transaction execution costs on layer-2 networks like Arbitrum and Optimism, a noticeable drop in the overall amount of ETH burned on the mainnet has been observed. While ETH supply has transitioned to an inflationary phase in recent months, the total supply of ETH has notably diminished post the Merge.
Collectively, over 1.5 billion ETH has been burned since September 2022, while 1.36 billion ETH has been newly minted, resulting in a net supply reduction of 345,000 ETH. This reduction translates to a value exceeding $1.1 billion at current market prices, ever since Ethereum shifted to a proof-of-stake consensus protocol.
The figures demonstrate the substantial impact of these developments on the ETH ecosystem, marking a significant shift in its supply dynamics in the wake of critical upgrades and transitions within the network.
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