Ethereum’s supply has been on a steady rise since mid-April, coinciding with the Dencun upgrade, which has decreased competition for block space on the mainnet.
Longest Inflationary Spell Since the Merge
The new Ether supply is experiencing its longest inflationary period since the Merge in 2022. The Dencun upgrade, implemented on March 13, plays a significant role in this trend. According to the Ethereum data dashboard ultrasound.money, over 112,000 ETH has been added to the supply since April 14.
Impact of the Dencun Upgrade
The Dencun upgrade introduced nine Ethereum Improvement Proposals (EIPs), including EIP-4844, which has been identified as a primary factor in the current inflation.
- EIP-4844: Introduced “blobs” to store transaction data separately and temporarily, reducing fees for block data on Ethereum layer 2 networks.
- Proto-Danksharding: Improved data availability for block space on the Ethereum mainnet, further lowering transaction costs on Ethereum layer 2 networks like Arbitrum and Optimism.
Reduction in ETH Burning
Despite the benefits of reduced transaction costs, the total amount of ETH being burned on the mainnet has decreased significantly. This reduction is a direct result of the Dencun upgrade’s enhancements.
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Net Supply Changes Since The Merge
While the recent months have seen an inflationary trend, the total supply of ETH has still seen a net decrease since The Merge. Since September 2022, over 1.5 billion ETH has been burned, while 1.36 billion ETH has been added, leading to a net reduction of 345,000 ETH, valued at just over $1.1 billion at current prices.
