Bittime – Ethereum is predicted to be ultrasound money which means the safest place to store money. However, an analyst from data company CryptoQuant revealed that the Dencun upgrade has great potential to make Ethereum (ETH) become an inflationary asset again.
A complete explanation of the correlation between the Dencun upgrade and the nature of ETH can be seen in this article until the end.
Transactions in Ethereum Decrease Drastically After Dencun Upgrade
A report released by CryptoQuant on Wednesday, May 8, 2024, stated that transaction fees on the Ethereum network decreased drastically after the Dencun upgrade.
As a result, the amount of ETH burned was the lowest since Ethereum switched from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism at The Merge. The report adds that ETH supply is currently growing at its fastest daily pace since The Merge.
"Before the Dencun upgrade, higher Ethereum network activity meant more fees were burned and therefore the supply of ETH was reduced. However, after the Dencun upgrade, the total fees burned were no longer directly related to network activity," explained CryptoQuant analysts.
The report concludes that at the current level of network activity, Ethereum is unlikely to become deflationary again. This means that the narrative of ETH as “ultra-sound money” may be dead or require much higher network activity to come back into play.
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What is Dencun Upgrade?
Ethereum's Dencun upgrade was implemented on March 13, 2024. This upgrade allows additional data storage in the form of "blobs" on the Ethereum network. This aims to increase efficiency and reduce Layer 2 transaction costs.
At the time of this writing, the price of ETH is around $3,018, down about 1% in the last 24 hours. Meanwhile, the GM 30 Index, which represents the top 30 cryptocurrencies, fell 0.71% to 129.87 in the same period.
The Impact of the Dencun Upgrade: Different Views and the Future of ETH
The report from CryptoQuant sparked heated discussion among crypto fans. Several different views emerged regarding the long-term impact of the Dencun upgrade:
ETH Could Still Be Deflationary
Some analysts argue that it is too early to conclude ETH will never be deflationary again. They argue that increased adoption of Ethereum and the use of Layer 2 could significantly increase network activity. This increase in activity has the potential to raise the amount of ETH burned again and push ETH back into a deflationary path.
Dencun Prioritizes Scalability
Other supporters of the Dencun upgrade argue that the top priority is improving the scalability of the Ethereum network.
They argue that lower transaction fees and a more efficient network will attract more users and developers to the Ethereum ecosystem. This could ultimately drive ETH's long-term growth, regardless of its inflationary or deflationary nature.
The Future of ETH: Keeping an Eye on Network Activity
Experts agree that network activity plays an important role in determining the future of ETH. Investors will need to continue watching Ethereum network activity, adoption of Layer 2 technology, and the overall development of the Ethereum ecosystem to understand the long-term impact of the Dencun upgrade.
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Conclusion
Ethereum's Dencun upgrade sparked debate about ETH's future as an inflationary or deflationary asset. Although CryptoQuant's report shows a decrease in ETH burning, there is still potential for ETH to return to deflation in the future.
Investors need to pay close attention to developments in the Ethereum ecosystem to make the right investment decisions.
Cara Beli Ethereum (ETH) di Bittime
You can buy and sell Ethereum (ETH) easily and safely via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Ethereum (ETH) is available on Bittime with the market pair ETH/IDR. To be able to buy ETH IDR at Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Ethereum (ETH) on Bittime.
Monitor price chart movements for Ethereum (ETH), Bitcoin (BTC), Solana (SOL), and other cryptos to find out today's crypto market trends in real-time on Bittime.
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DISCLAIMER: This article is informational and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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