The Ethereum merge last year was expected to establish ETH as “ultrasound money” with reduced issuance, but a year later, ETH’s supply has increased by nearly 30,000 ETH due to reduced network activity.
Lower gas fees have led to less ETH being burned, causing concerns about inflation in the Ethereum network.
However, the Ethereum development team remains unconcerned, viewing the inflation as insignificant compared to historical levels and other blockchain networks.
They believe the current trend is manageable within the broader economic context and challenges faced by cryptocurrencies like Bitcoin and Ethereum due to changing economic conditions.
Since 2021, the Ethereum network has employed a fee-burning mechanism, where higher network traffic leads to increased gas prices required for on-chain transactions. Elevated gas prices result in more ETH being “burned” or permanently removed from circulation.
However, recent Ethereum gas fees have dropped significantly, with an average network transaction costing just 7 gwei, or $0.24. For instance, the average transaction fee on the NFT marketplace OpenSea is approximately $0.94, in stark contrast to over a year ago when users burned over $157 million worth of Ethereum during the sale of Yuga Labs’ Otherside collection, with transaction fees averaging $2,854 per transaction.
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