Ethereum's Inflation Plan Didn't Work: Fees at 5-Year Low, Supply Increasing!

On-chain analysis platform Kaiko revealed the inflation crisis in its report on Ethereum.

Ethereum supply was connected to a variable inflationary mechanism with The Merge. According to this mechanism, if transactions and transaction fees on the network increase, more Ethereum needs to be burned to confirm these transactions.

However, when the transaction fees and number on the network decrease, the burning rate decreases and the Ethereum supply automatically increases.

Ethereum hits the bottom of the last 5 years

According to Kaiko data, Ethereum transaction fees fell to the bottom of the last 5 years with the decrease in demand and activities on the network. This data recorded on August 19-20 revealed that less Ethereum was burned and the inflationary structure had taken control for now.

The total supply of Ethereum has been steadily increasing since April. Despite demand drivers such as spot ETH ETFs, this increased supply could reduce potential price increases in the near term.

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