- The quantity of fees burned after the Dencun update has drastically decreased, according to analysts, and the new supply of ether is expanding at the quickest daily rate since the Merge.
- The Dencun upgrade has caused ether to become inflationary once more, possibly eliminating its status as “ultra-sound” money, according to analysts at data firm CryptoQuant.
According to a report published on Wednesday by CryptoQuant, the amount of ether burned has decreased to one of its lowest levels since the Merge, when Ethereum switched from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. This is because the Dencun upgrade has reduced transaction fees on the Ethereum.
Prior to the Dencun update, increased Ethereum network activity resulted in greater fees burnt and a decrease in the amount of ether available. Nevertheless, according to CryptoQuant experts, following the Dencun upgrade, the overall number of fees burned has disconnected from network activity.
The analysis came to the conclusion that Ethereum will not experience deflation at the current rate of network activity and that the idea of Ethereum being “ultra-sound” money has either vanished or would require significantly more network activity to survive.
What is the update for Dencun?
The Dencun update for Ethereum went into effect on March 13, 2024. By keeping more data in “blobs” on the Ethereum network, the update increases efficiency and lowers Layer 2 transaction costs.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
