HomeEthereumCryptoQuant Explains Why Ethereum is Now a Non-Deflationary Network

CryptoQuant Explains Why Ethereum is Now a Non-Deflationary Network


Is Ethereum Still a Deflationary Network?

Title: Ethereum’s Deflationary Narrative Shattered with Latest Upgrade

In a surprising turn of events, Ethereum, once hailed as a deflationary network, has lost its ultrasound money narrative following the Dencun upgrade. This upgrade, implemented in March, significantly reduced transaction fees on the blockchain, leading to a reversal in Ethereum’s deflationary trend.

The ultrasound money narrative positioned Ethereum as a network that could maintain its purchasing power over time and resist inflation, similar to Bitcoin’s sound money principle. Previous upgrades such as the London upgrade and the Merge had successfully reduced the issuance of new ETH and exerted deflationary pressure on the network.

However, the Dencun upgrade changed the game by slashing transaction fees on Ethereum layer-2 chains and introducing danksharding for more efficient data storage. This reduction in fees has led to a decrease in the amount of ETH burned, despite high network activity, ultimately making Ethereum no longer deflationary.

According to CryptoQuant analysts, Ethereum’s supply of ETH has become positive again, marking the highest daily rate since the Merge. The amount of fees burned has also plummeted significantly, signaling the end of the ultrasound money narrative for Ethereum.

With the current rate of network activity, Ethereum is unlikely to return to its deflationary state unless there is a substantial increase in network activity. The once-promising narrative of Ethereum as ultrasound money has now been called into question, leaving developers and analysts to reassess the network’s monetary principles.


Advancing Federal Regulation of Blockchain and Cryptocurrency: A Focus on Sullivan & Worcester’s Initiatives

Key Points of FIT21 Legislation and Potential Impact The U.S. House of Representatives made history on May 22, 2024, by passing H.R. 4763, also known...

Is this a signal of Bitcoin hitting bottom? German government depletes BTC supply

German Government Running Out of Bitcoin to Sell, Potential Reaccumulation Phase Beginning The German government is nearly done selling Bitcoin, with only 3,856 BTC left...

Could a Trump presidency improve the sentiment problem in the crypto industry?

The Trump Trade: How a Potential Trump Presidency Could Impact Crypto Markets The race for the presidency is heating up, and it seems that former...

Justin Sun, Tron Founder, Invests $5 Million in ETH

Tron Founder Justin Sun Invests $5 Million in Ethereum (ETH) Tron Founder Justin Sun Invests $5 Million in Ethereum Amid Spot ETF FOMO Justin Sun, the...

Most Popular