- Ethereum’s Dencun upgrade is shaping up to be a major success.
- The update has led to the network’s ether supply significantly dropping.
- Ether supply is at its lowest level since August 2022.
Ethereum made history in the past week by rolling out the highly anticipated Dencun upgrade to the mainnet, much to the relief and excitement of users. The upgrade was set to mark a major step in the network’s scaling vision, promising to immediately bolster the scalability of Layer-2 chains and usher in a new era of use cases.
Now that Dencun is finally a reality, the network is already reaping the benefits of a rapidly declining ether supply.
Dencun Makes a Mark
Ethereum’s latest upgrade, Dencun, has left a notable impact in its first week, evident in the reduction of ether’s total supply. According to CryptoQuant, by mid-week, the total supply of ether had dropped to its lowest level since August 2022.
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The last time ether’s supply reached this level was during Ethereum’s most significant upgrade in history when it transitioned from its initial proof-of-work consensus to proof-of-stake, also known as The Merge.
Over the past month, ether’s supply has decreased by 0.872%, marking the fastest decline since May 2023. In contrast, since The Merge itself, the rate of decline has been 0.246%.
The rapid decline can be attributed to daily transactions on Ethereum reaching record levels, averaging over 1.2 million transactions, resulting in more fees being burned and a subsequent dip in the total supply.
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Additionally, since August 2022, over 1.56 million ether have been burned, while only 1.12 million ether have been issued, leading to a net decline of over 446,000 ether, valued at nearly $1.62 billion at current prices.
Ethereum could significantly boost the token’s price if it maintains increased activity and a decreasing ether supply. At press time, Ethereum exchanged hands for $3600.
On the Flipside
- Most layer-2 networks have reported declines as high as 99% in their transaction fees post-Dencun.
- Despite the promise of blobs, some experts have cautioned that Layer 2 fees may rise again as more chains jump in and the blobs fee market becomes more saturated.
Why This Matters
The Dencun upgrade is the largest the Ethereum network has undergone since The Merge. With promises of significant cost reductions for Layer-2 chains, heightened network activity and diminishing ether supply could fuel an increase in Ethereum’s price.
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