According to a report by The Block, analysts from blockchain data analytics company CryptoQuant suggest that the DenCun upgrade on the Ethereum blockchain has caused a resurgence of inflation in Ethereum (ETH), potentially undermining its status as “ultra-sound” money.
In a report released on Wednesday, CryptoQuant stated that due to the decrease in transaction fees on the Ethereum network following the DenCun upgrade completed on March 13th, the amount of ETH being burned has reached one of the lowest levels since the merge upgrade. The report also noted that the supply of ETH is growing at the fastest rate since the network merge.
According to the analysts at CryptoQuant, the report indicates that Ethereum is unlikely to experience deflation again given its current network activity, and the narrative of Ethereum as “ultra-sound” money may have disappeared or requires higher network activity to revive.
The concept of “ultra-sound money” in Ethereum, as described by the Ethereum data website ultra sound money, focuses on the potential decrease in ETH supply. This concept originated from Ethereum co-founder Vitalik Buterin, who jokingly mentioned the term “supersonic money” when discussing currency with negative growth in circulation in 2020. Later, Ethereum researcher Justin Drake extended the term to “ultra-sound money” in describing the supply changes of Bitcoin and Ethereum.
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