ETH Inflation Hits Highest Level Since EIP-1559 Implementation

    Ethereum’s network activity dropped significantly due to the market downtrend, severely affecting the decentralized finance and NFT sectors.

    Gas prices also fell. In fact, new data shows these numbers have hit multi-year lows and are now near May 2020 levels.

    With Ethereum fees sliding below $5 per transaction, the amount of ETH burned by EIP-1559 records an all-time low. Furthermore, only 11% of the amount released from mining is burned in circulation.

    This is ETH’s most inflationary since EIP-1559 went live, as Glassnode researcher pointed out.

    Source: Checkɱate

    Ethereum adopts burning to help users transition from the existing PoW network to the new PoS.

    EIP-1559 was introduced last summer, and it essentially burns the ETH obtained from fees related to verifying transactions on the network.

    The aim of the burn mechanism was to make Ethereum deflationary. However, the high issuance rate took the network in a different direction.

    On the other hand, Ethereum’s long-awaited “The Merge” is expected to reduce the supply with the help of EIP-1559 by burning ETH.

    IntoTheBlock research director Lucas Outumuro thinks that ETH’s net issuance will be limited to a range of 0.5% to 4.5% based on network fees after The Merge.

    As in historical data, the net issuance of ETH is expected to decrease, driving the price up as the circulating supply gets lower.

    Source: IntoTheBlock

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