Crypto News- According to analysts at data firm CryptoQuant, the recent Dencun upgrade has resurrected inflationary concerns for Ether, potentially eroding its reputation as ‘ultra-sound’ money. In a report unveiled on Wednesday, CryptoQuant highlighted a significant drop in ether burned, attributing it to reduced transaction fees following the Dencun upgrade. This decline marks one of the lowest levels since the Merge, when Ethereum transitioned from proof-of-work to proof-of-stake consensus.
Ethereum’s Dencun Update Stirs Controversy: CryptoQuant Uncovers Inflationary Patterns in ETH
“Pre-Dencun upgrade, heightened network activity led to increased fee burn, tightening ether supply. However, post-upgrade, fee burn no longer correlates with network activity,” explained CryptoQuant analysts.
Ether’s Deflationary Hopes Dashed: Can Ethereum’s ‘Ultra-Sound’ Money Status Survive?
The report paints a grim picture, suggesting that Ethereum’s current trajectory renders it unlikely to revert to deflationary status. The notion of ether as ‘ultra-sound’ money, it asserts, may have met its demise unless network activity sees a substantial uptick.
But what exactly is the Dencun upgrade? Implemented on March 13, 2024, the upgrade allows for more efficient data storage in ‘blobs’ on the Ethereum network, particularly beneficial for Layer 2 transactions, promising enhanced efficiency and reduced costs.
As of writing, Ether is trading around $3,018, marking a slight 1% dip over the past 24 hours, as reported by The Block’s price page.
Meanwhile, the GM 30 Index, representing the top 30 cryptocurrencies, experienced a 0.71% decline to reach 129.87 within the same period.
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