What's happened? At the end of last week, activity on the Ethereum network showed significant growth, with some on-chain indicators setting highs over the past 12 months. Thus, on March 17, the number of active and new addresses #Ethereum jumped to an annual maximum of 563,550 and 121,800, respectively. Additionally, on the same day, daily transaction volume exceeded $7.2 billion.
What else is known? By the middle of last week, ETH supply reached its lowest level since August 2022, according to analytics platform CryptoQuant. On September 15, 2022, the Ethereum network, as a result of The Merge hard fork, switched from the Proof of Work (PoW) consensus algorithm to Proof of Stake (PoS), and also introduced a mechanism for burning coins paid as a transaction fee. , which made ETH a deflationary asset.
Currently, the rate of decline in ETH supply is at its highest level since May last year. Over the past 30 days, the annual supply of the asset has decreased by 0.8%, while immediately after The Merge update the figure was only 0.246%.
As explained by Julio Moreno, head of research at CryptoQuant, the increase in activity on the Ethereum network has led to an increase in transaction fees and, therefore, an increase in the amount of ETH burned, paid out as commissions. The number of daily transactions has reached its peak since May 2023, he added. Thus, the 7-day moving average (7DMA) reached 1.26 million on March 17.
Since The Merge, over 1.56 million ETH have been burned and less than 1.12 million issued. This resulted in a net decrease in supply of more than 446,000 coins, according to exchange rates as of March 18, exceeding $1.598 billion.
In addition, on March 13, the Dancing hard fork took place on the #Ethereum blockchain, which made it possible to reduce commissions in second-level (L2) networks based on it by 60-90%. Against this background, the daily number of transactions in the L2 database reached a new historical maximum, exceeding 2.1 million.
