On March 13, the Ethereum network underwent a pivotal upgrade known as Dencun, leading to a considerable decrease in the total supply of ether, marking its lowest level since August 2022. This significant development is part of Ethereum’s transition from a proof-of-work to a proof-of-stake model, a change that began with the much-discussed Merge upgrade.
Accelerated Decrease in Ether Supply
As reported by CNBC, the rate at which ether’s supply is decreasing has reached the fastest pace observed since May 2023. Over the past month, there has been a 0.872% annual decrease in supply, a sharp contrast to the 0.246% decrease noted since the Merge. This rapid reduction in ether supply is attributed to the increased activity on the Ethereum network, resulting in higher transaction fees and a larger amount of fees being burnt.
Since the Merge, the Ethereum network has seen over 1.56 million ether burned, with less than 1.12 million ether issued. This activity has led to a net decline of more than 446,000 ether, equivalent to nearly $1.62 billion.
Impressive On-Chain Metrics Amid Rising Activity
Despite growing interest in other networks like Solana, Ethereum’s on-chain metrics continue to impress. The network’s seven-day moving average of transactions is nearing its 12-month peak, with recent records showing 1.26 million transactions. Additionally, both active addresses and new addresses on Ethereum have hit their highest points for the year and over the past 12 months, respectively. Moreover, on-chain volume has exceeded $7 billion, showcasing the robust nature of Ethereum’s network amid this period of heightened activity and increased fees.
The Dencun upgrade not only marks a significant reduction in the supply of ether but also highlights Ethereum’s enduring strength and capacity to manage an elevated level of transaction activity. This upgrade reflects Ethereum’s ongoing evolution and its ability to adapt to changing market dynamics while maintaining a strong and active ecosystem.
