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In a span of 17 days, Ethereum transitioned from a deflationary model to an inflationary one, recording a 0.178% increase. This time frame saw an augmentation of 22,502 ether to the network, with a monetary valuation of $35.31 million.

Increased Inflation in Ethereum Triggered by Drop in Onchain Operations

Historically, Ethereum upheld a deflationary approach, chiefly attributed to the London hard fork’s EIP-1559 and the prominent transition from proof-of-work (PoW) to proof-of-stake (PoS). However, recent months have registered a conspicuous decrease in onchain dynamics.

This downturn implies that the EIP-1559’s fee-elimination mechanism has incinerated a diminished number of ethers. A mere 17 days ago, Ethereum’s issue rate was faintly inflationary, pegged at 0.270% per annum. Presently, it is poised at 0.448%, signaling an elevation of 0.178%.

On October 11, 2023, inflation rate figures were released by ultrasound.money.

Progressing to September 24, 2023, the aggregate ether reserve stood at 120,228,449. Advancing to 11:00 a.m. Eastern Time on October 11, 2023, this number has climbed to 120,250,951. Such a growth corresponds to a surge of 22,502 ether, appraised at $35.31 million, underlining the intensified inflation rate.

A lull in Ethereum’s daily transaction rate is evident, with layer two (L2) frameworks eating into its dominance. Data procured from bitinfocharts.com on the aforementioned Wednesday suggests Ethereum’s average transaction cost is 0.0012 ETH or $1.83, a nadir unseen since December 2022.

Delving further, the median transaction fee for the network is determined at 0.00046 ETH or $0.726, as referenced from bitinfocharts.com. As of October 11, figures from ultrasound.money depict a burn rate of 0.57 ETH per minute, with a total of 5,783.55 ETH being obliterated in the preceding week.

Statistics from Ultrasound.money highlight an astonishing total of 3,633,752 ether eradicated post the initiation of EIP-1559, 797 days ago, averaging at a burn rate of 3.17 ETH every minute. Solely in the previous week, the supply observed an influx of 10,321 ETH.

Yet, if PoW had continued its reign, this amount would have skyrocketed to 88,724 ETH in a week, as mirrored by the website’s hypothetical PoW dataset.

Readers are invited to express their perspectives and analyses on Ethereum’s escalating inflation rate in the designated comments space below.

Frequently Asked Questions (FAQs) about Ethereum Inflation

What caused Ethereum to shift from a deflationary to an inflationary model?

Ethereum’s shift was influenced by several factors, including changes from the London hard fork’s EIP-1559 and the transition from proof-of-work (PoW) to proof-of-stake (PoS). Furthermore, a marked decline in onchain activities over the recent months played a significant role.

How much ether was added to the network in the last 17 days?

In the last 17 days, 22,502 ether was added to the Ethereum network, valued at $35.31 million.

How has the EIP-1559 fee-burning mechanism been affected recently?

The EIP-1559’s fee-burning mechanism has seen reduced activity, torching fewer ethers. This is largely due to the decline in onchain activities.

What was Ethereum’s issuance rate 17 days ago compared to now?

Seventeen days ago, Ethereum’s issuance rate was slightly inflationary, standing at 0.270% annually. As of now, it has increased to 0.448%.

How has Ethereum’s daily transaction rate been affected recently?

Ethereum’s daily transaction rate has been stagnating, with layer two (L2) platforms impacting its overall activity. This has also led to a drop in Ethereum’s average transaction fee.

How much ether has been burned since the inception of EIP-1559?

Since the inception of EIP-1559 797 days ago, a staggering 3,633,752 ether has been burned.

If proof-of-work (PoW) had remained active, how would the ether supply have been affected within a week?

Had PoW remained in play, the ether supply would have surged by 88,724 ETH within a week, based on simulated PoW data.

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7 comments

Mike Jansen October 12, 2023 - 2:43 am

Not surprised to see ether’s inflation, given the onchain activities declining. It’s all interconnected guys. just have to keep an eye out.

Reply
HarryT October 12, 2023 - 5:23 am

Wow…over 3.6 million ether burned since EIP-1559’s start? thats huge. Makes you think where we’ll be in another 2 years or so.

Reply
JakeP October 12, 2023 - 8:21 am

Proof-of-work would’ve added 88,724 ETH in a week?? thats crazy… wonder if moving to PoS was the right move now.

Reply
Sam Kents October 12, 2023 - 1:53 pm

i’m not much into the technical side of things. but this seems like a big deal? maybe I should read up more.

Reply
Lea_Mitch October 12, 2023 - 3:04 pm

Missing some of the good old days with simpler mechanisms. too much going on now. Makes my head spin sometimes. But guess thats crypto for ya.

Reply
LuciaM October 12, 2023 - 5:36 pm

That shift from deflationary to inflationary? didn’t see that coming tbh. thought with EIP-1559 everything was gonna be more stable.

Reply
RinaB October 12, 2023 - 7:54 pm

ether’s daily transaction rate stagnating is a bit worrisome. with L2 platforms coming up, eth needs to step up its game. just my two cents.

Reply

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