#Ethereum is back in the news, and not because of its “ultrasonic money”! As it turns out, ETH’s inflation rate has jumped to a two-year high of 0.74%, and some are already starting to question whether this deflationary narrative is more fairy tale than anything else.
According to the October Binance Monthly Market Insights report, onchain activity is calmer than a Sunday siesta, and with it, ETH burning fees have fallen. The culprit? The rise of layer 2 solutions, such as Arbitrum and Optimism, which process transactions outside of the Ethereum mainnet. Simply put, less ETH is being burned, more ETH is being issued, and inflation is skyrocketing.
While Ethereum fans may be a little nervous, Binance reminds that even though inflation is up, it’s still below 1%, so don’t panic just yet. In times of high activity, Ethereum could become deflationary again… if the network perks up again.
On the other hand, the “ultrasonic money” narrative is in question. With fewer transactions and fewer fees burned, the idea that ETH is the quintessential deflationary cryptocurrency seems shakier than ever. September was a quiet month in terms of burning, and ETH issuance outpaced burns again.
In the midst of all this, Vitalik Buterin is not sitting idly by. He is proposing to reduce the minimum deposit from 32 ETH to something between 16 and 25 for solo stakers. A move that seeks to bring more people to the node party, but could also affect those who already have their precious 32 ETH locked away.
So, will ETH be deflationary or not? Only time (and fees) will tell. In the meantime, stay calm and keep an eye on those charts!
