30-Day Surge: Ethereum's Supply Grows by $47 Million

Last Updated October 9th 2023
3 Min Read

Key Takeaways -

  • Ethereum's global supply has risen by nearly 30,000 units, or $47.9 million, mainly due to decreased transaction activity in the NFT and DeFi sectors.
  • Lower average gas fees of 7 gwei have led to less Ethereum being burned, contributing to the supply increase.
  • Despite the inflationary trend, Ethereum's core developers remain largely unconcerned, noting that ETH's short-term inflation is still lower than other blockchain networks and the global economy.

Last year was pivotal for Ethereum as it transitioned from a Proof-of-Work to a Proof-of-Stake model. This shift led to a 90% reduction in the issuance of Ethereum (ETH), fueling expectations that Ethereum would become a deflationary asset. Fast forward to today, and the situation seems to have taken a different turn. This article aims to dissect the complexities surrounding Ethereum's supply, the role of gas fees, and the implications for investors.

The Numbers Don't Lie

Ultrasound.money, a reputable data aggregator in the crypto space, has recently reported some eye-opening statistics. Over the last 30 days, the global supply of Ethereum (ETH) has seen a notable increase of nearly 30,000 units. In monetary terms, this surge is equivalent to a staggering $47.9 million. What's driving this increase? The primary factor appears to be a significant drop in transaction activity on the Ethereum network. This is especially true in specialized sectors like Non-Fungible Tokens (NFTs) and Decentralized Finance (DeFi), which have seen less trading and transactional volume lately.

The Gas Fee Puzzle

The Gas Fee Puzzle

Ethereum's network is unique in its operation, particularly when it comes to its fee-burning mechanism. When the network experiences high traffic, gas fees, which are crucial for the completion of any transaction, tend to rise. However, in recent times, the average gas fee has seen a decline, dropping to as low as 7 gwei, or approximately $0.24. While this is certainly beneficial for users who are looking to complete transactions at a lower cost, it has a downside. The reduced gas fees have led to less Ethereum being burned, which in turn has contributed to the overall increase in the supply of ETH.

Investor Sentiments and Expert Opinions

The recent inflationary trend in Ethereum's supply has led to mixed reactions among investors. Ethereum core developer Micah Zoltu considers the issue to be "insignificant" in the broader context. Another core developer, Danno Ferrin, points out that Ethereum's short-term inflation is still lower than other blockchain networks and the global economy.

A Broader Economic Context

Inflation is not just a challenge for Ethereum; it's a global phenomenon that has been affecting all financial markets, including the realm of cryptocurrencies. Despite the recent increase in its supply, Ethereum continues to maintain a strong position in the market. When it comes to market capitalization, Ethereum is still a formidable player, holding its own against other cryptocurrencies and traditional financial assets.

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