In the last 30 days, the global supply of Ethereum (ETH) has increased by nearly 30,000 ETH, equivalent to around $47.9 million. This growth in supply is mainly attributed to a decline in transaction activity on the Ethereum network, including fewer trades of non-fungible tokens (NFTs) and less decentralized finance (DeFi) activity.
Since 2021, the Ethereum network has used a fee-burning mechanism where higher network congestion leads to higher gas prices for transactions, resulting in more ETH being burned or removed from circulation. However, recently, Ethereum gas fees have dropped significantly, leading to lower ETH burning and an increase in the overall supply of ETH.
This inflationary trend in Ethereum has raised concerns among some crypto users and investors who worry about the long-term financial health of the network. However, Ethereum’s core developers seem largely unconcerned about this development, considering it insignificant in the grand scheme of things. They point out that Ethereum’s current supply is still below its all-time high, and its short-term inflation is lower compared to other chains and the overall economy.
It is worth noting that inflation has been increasing globally since last year, and the U.S. Federal Reserve’s decision to raise interest rates in response to rising prices has affected the values of cryptocurrencies like Bitcoin and Ethereum.
Source: Decrypt
