ETH Reverts to Inflationary Asset Following Fee-Reducing Dencun Upgrade
Ethereum's Dencun upgrade, aimed at reducing fees and scaling the network, has caused ether (ETH) to become an inflationary asset again, potentially reversing a key benefit of the 2022 Merge. The Dencun upgrade has lowered Ethereum transaction fees by an average of four times, but it has also reduced the amount of ETH being burned to one of the lowest levels since the Merge. As a result, the supply of ETH is growing at the fastest rate since 2022. The 2022 Merge transitioned Ethereum from a proof-of-work blockchain to proof-of-stake and implemented a mechanism that burned a portion of transaction fees, causing deflationary pressure. However, following the Dencun upgrade, the total amount of fees burned has decoupled from network activity, leading to an increase in Ether's supply by 400,000 tokens since April.
