The Dencun Upgrade Has Made Ethereum (ETH) Inflationary Again, Says Research

The Dencun Upgrade Has Made Ethereum (ETH) Inflationary Again, Says Research
Table of Contents


  • The Dencun upgrade has changed Ethereum’s dynamics towards an inflationary model by reducing the amount of ETH burned by fees.
  • Transaction fees on Ethereum have decreased significantly after the Dencun upgrade, despite high activity on the network.
  • This has led to a decrease in ETH burning and an increase in the total supply of the cryptocurrency.

Ethereum has been considered an example of “ultra-safe money,” referring to a currency that not only maintains its value, but can also reduce its supply over time.

However, the Dencun update has brought about significant changes to this narrative, according to a recent report from CryptoQuant.

Before the Dencun upgrade, Ethereum’s economic model was leaning towards deflation.

The burning of ETH through high transaction fees contributed to a steady reduction in the total supply of ETH, thus creating the perception of an “ultra-safe” asset.

However, the successful implementation of Dencun has led to a drastic decrease in transaction fees, even during times of high network activity.

This has caused a reduction in the amount of ETH burned, reversing the deflationary trend.

This structural change is evident in the relationship between transaction fees and blockchain network activity

Before Dencun, more activity on the network resulted in higher fees and therefore less ETH in circulation.

Dencun Update Has Made Ethereum (ETH) Inflationary Again, Research Says

Dencun in action and important changes

However, currently, despite the high activity on the network, transaction fees have been observed to be considerably lower compared to previous periods.

This reduction in fees has resulted in less burning of ETH by users and, as a result, an increase in the total supply of the cryptocurrency in circulation.

The Ethereum community is currently faced with the challenge of balancing the operational efficiency of the network with the vision of the cryptocurrency as “ultra-secure money.”

This balance involves considering how lower fees , while beneficial to users and making it easier to access the network, have also transformed the underlying economic structure of Ethereum.

While lower fees have positive effects on the user experience and encourage adoption of the Ethereum network, they have also led to a significant change in the way ETH supply and demand is managed.

For Ether to once again be considered “ultra-safe money”, a deep review of fee policies and increased activity on the network will be required to maintain a balance between efficiency and long-term economic sustainability.


Follow us on Social Networks

Crypto Tutorials

Crypto Reviews