Key Points
- Ethereum’s recent upgrade has led to a significant decrease in the total supply of ether.
- Increased Ethereum network activity has resulted in high transaction fees and a subsequent decrease in ether supply.
The latest upgrade to Ethereum, Dencun, was activated in mid-March. However, it’s the previous upgrade that has significantly contributed to the decrease in the total supply of ether.
As of the middle of the week, the total ether supply has fallen to its lowest point since August 2022. This data was provided by CryptoQuant, as reported by CNBC.
Ethereum’s Major Upgrade
It was shortly after August 2022 that Ethereum underwent its most significant upgrade, transitioning from proof-of-work to proof-of-stake. This upgrade is commonly referred to as The Merge.
Currently, the rate of decline in ether supply is the fastest it has been since May 2023. Over the past month, the ether supply has been decreasing at a rate of 0.872% per year, as per data from ultrasound.money.
According to Julio Moreno, CryptoQuant’s head of research, this decrease is due to high transaction fees resulting from increased activity on the Ethereum network.
Decline in Ether Supply
In terms of raw numbers, over 1.56 million ether has been burned since The Merge, while less than 1.12 million ether has been issued. This has resulted in a net decline of over 446,000 ether, equivalent to nearly $1.62 billion at current rates.
Despite the attention Solana is receiving, activity on the Ethereum network remains significant. The seven-day moving average of transactions on the Ethereum network is close to its 12-month high, recorded in January. On a single day, 1.26 million transactions were logged on the blockchain, which is the second-largest by market capitalization.
Moreno noted that high transaction activity leads to increased network fees, more fees being burned, and a decrease in total supply. In addition, the number of active and new addresses on the Ethereum network is at year-to-date and 12-month highs.
Furthermore, Ethereum’s on-chain volume has reached new year-to-date and 12-month highs, with more than $7 billion in on-chain volume recorded in a single day.
