Ethereum Inflation Surge Casts Doubt On “Ultrasound Money” Claim: Report
Ethereum's issuance rate rose in September 2024, with a 30-day annualized inflation rate of approximately 0.74%, deviating from its previous deflationary status. This increase raises concerns about Ethereum's claim as "ultrasound money," especially compared to Bitcoin's capped supply. Factors contributing to the high issuance rate include low mainnet on-chain activity, resulting in lower transaction fees and ETH burn rates. The EIP-1559 fee-burning mechanism, implemented in 2021, aimed to reduce circulating supply but has been ineffective due to declining mainnet activity. September 2024 recorded one of the lowest ETH burn rates since the Merge event. The inflationary trend began in March 2024 after the EIP-4844 upgrade, which lowered transaction costs on layer-2 solutions like Optimism and Arbitrum, leading to increased network activity on these platforms. ETH is currently trading at $2,385, reflecting a 1.7% increase in the past 24 hours.
