Investors have been rapidly hoarding the second-largest cryptocurrency by market capitalization in the past weeks. However, recent data suggests that deflation on the Ethereum network has witnessed a significant rise in the past months.
According to data, deflation on the Ethereum network has been rising and the values have hit record-breaking figures. Notably, the value of deflation has hit a record high in the six months following the Merge.
The Ethereum Merge refers to a software upgrade that swapped the platform’s consensus mechanism from a proof-of-work protocol to a proof-of-stake system. Taking effect on September 15, 2022, the Merge reduced the Ethereum blockchain’s energy consumption by 99.5 percent.
Looking at the graph provided below, we can add values to the assertion that deflation on the Ethereum network has been rising and especially following The Merge. Data suggests that the supply of the asset has dropped by nearly 63,000 Ethereum.
In the months following the Merge, deflation on the Ethereum network has been increasing as the supply has dropped to a record low. Since the milestone event happened just under six months ago, the Ethereum supply has dropped by nearly 63,000 and the current supply is estimated at about 120.45 million Ethereum.
The currency burn rate of the second largest cryptocurrency has been reported to be 12,33,000 coins over the last 30 days whereas the supply growth has been reported to be at -0.45% over 30 days.
According to analysts, at these rates, the Ethereum supply is projected to reach 118.1 million by the year 2025. They have also estimated the issuance rewards for stakers to stand at around 4% per year, trumping the burn rate for non-stakes, which is 1.8% per year. The supply should also have a pearl of 120.6 million ETH at current levels over the next two years.
Sources reveal that most of the burns come from Ethereum transfers through decentralized finance (DeFi) giants also contribute greatly. Concerning the latter, Uniswap, Tether, and Blur top the board.
Notably, it has also been marked as a positive sign for Ethereum, which has undergone some major changes over the past few years. The token’s switch to Proof-of-Stake has accelerated its goals to becoming the major smart contract network on the market, and no other project comes close in terms of success.
More importantly, Ethereum has also been gaining more attention in recent times as the launch of the Shanghai upgrade draws close. The upgrade will allow stakers to unlock their staked Ether, which is a major feature. The upgrade was expected to arrive in the first half of 2023 but has been delayed to happen in April now.