Ethereum Supply Increases Amidst Prolonged Inflationary Period Post-2022 Upgrades

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Ethereum’s supply has entered its longest inflationary period since the 2022 updates, potentially due to the March Dencun upgrade.
According to Ethereum data dashboard ultrasound.money, the Ether supply has been gradually increasing, adding over 112,000 ETH to the total supply since April 14th.
Much of this inflationary trend may be a result of the Dencun upgrade on March 13th, which introduced nine Ethereum Improvement Proposals (EIPs), including EIP-4844.

Discover the latest ramifications of recent Ethereum updates on its supply and future projections. Learn how these changes shape the cryptocurrency’s landscape.

Ethereum Upgrades and Their Consequences

The EIP-4844 proposal introduced blobs, which are inexpensive and temporary memories that store transaction-related data. This mechanism allows for separate and temporary storage of transaction data, reducing fees for block data on Ethereum layer-2 networks.

Additionally, the Dencun upgrade brought forth proto-danksharding, targeting more efficient data availability on the Ethereum mainnet block space. Consequently, transaction costs on Ethereum layer-2 networks like Arbitrum and Optimism have seen significant reductions, leading to a notable decrease in the total amount of ETH burned on the mainnet.

Impact on Ethereum’s Supply

Despite the recent trend towards inflation, the overall Ether supply has decreased significantly since the Ethereum Merge. Since September 2022, over 1.5 billion ETH has been burned, while approximately 1.36 billion ETH has been produced, resulting in a net reduction of 345,000 ETH. The transition to Proof-of-Stake has materially reduced supply, with the current economic impact valued at approximately $1.1 billion.

These Ethereum developments, especially regarding spot ETFs, are likely to influence the price structure in the medium to long term. Altcoin investors are advised to closely monitor ETH during this period.

Conclusion

In summary, Ethereum’s series of upgrades and proposals continue to reshape its supply dynamics and future. While these developments have introduced inflationary trends in the short term, the long-term reductions in supply and enhancements in transaction efficiency signal a promising landscape for the cryptocurrency. Investors should stay informed and vigilant as these factors evolve.