Ether on the Move: Ethereum's Supply Shrinks After Dencun Upgrade

Ethereum's Upgrade Dencun Leads to Supply Drop to Lowest Since August 2022

Dencun, Ethereum's latest upgrade, has caused a notable decline in ether's total supply within its first week. By mid-week, the total supply of ether had plummeted to its lowest level since August 2022, marking a significant milestone for the network. This reduction mirrors a similar occurrence during Ethereum's transition to proof-of-stake consensus, known as The Merge.

Ethereum Supply Rapidly Declines, Marking Fastest Drop Since May

Over the past month, ether's supply has decreased by 0.872%, the swiftest decline since May 2023. This trend contrasts with the rate of decline post-The Merge, which stood at 0.246%. The decline is primarily attributed to record-breaking daily transactions on Ethereum, surpassing 1.2 million, resulting in increased fee burning and subsequent reductions in total supply.

Since August 2022, over 1.56 million ether have been burned, while only 1.12 million ether have been issued. This imbalance has led to a net decline of over 446,000 ether, valued at nearly $1.62 billion at current prices. The continuous burn rate underscores the network's robust activity and demand.

Ethereum Supply Reduction and Network Activity Surge Could Boost ETH Prices, Experts Warn of Potential Fee Increases

The declining supply coupled with increased network activity could potentially drive up Ethereum's token price. At present, Ethereum is trading at $3600, reflecting the market's response to these dynamics.

Post-Dencun, most layer-2 networks have reported significant declines in transaction fees, reaching up to 99%. However, some experts caution that fees may rise again as more chains join and the fee market becomes saturated.

The Dencun upgrade represents Ethereum's most significant overhaul since The Merge. With promises of reduced costs for Layer-2 chains, the heightened network activity and diminishing ether supply could pave the way for Ethereum's price surge in the near future.