Ethereum

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You can also read this news on COINTURK NEWS: <a href="https://en.coin-turk.com/ethereum-faces-inflationary-trends-despite-supply-mechanisms/" data-wpel-link="internal" rel="noopener noreferrer nofollow">Ethereum Faces Inflationary Trends Despite Supply Mechanisms</a> 
The transition to PoS led to a significant rise in ETH, but the trend was not favorable. Although we entered an upward trend, the ETH price faced changes in supply and remained far from its previous levels when BTC was at $60,000. So, is the supply increasing to a concerning degree?
<h2 style="text-align: justify" id="ethereum-supply-and-inflation">Ethereum Supply and Inflation</h2>
ETH supply is unlimited. Unlike many cryptocurrencies that have a cap like BTC’s 21 million, ETH has mechanisms that determine annual token inflation. If token demand exceeds annual inflation and <a href="https://finance.coin-turk.com/" data-wpel-link="exclude" rel="noopener noreferrer nofollow">long-term investors</a> are sufficient, the price of an <a href="https://en.coin-turk.com/the-sec-targets-cryptocurrencies-37-altcoins-now-classified-as-securities/" data-wpel-link="internal" rel="noopener noreferrer nofollow">altcoin</a> with unlimited supply can rise.
With the PoS transition, ETH supply did not become limited, but miner rewards were eliminated and more reasonable staker rewards were introduced. Since a portion of the revenue from transaction fees is burned, strong network activity and high transaction fees led to a decrease in supply. Thus, we began to see negative inflation.
Now, this has changed. According to Ultrasoundmoney <a href="https://newslinker.co/how-does-artificial-intelligence-work/" target="_blank" rel="noopener noreferrer nofollow" data-wpel-link="exclude">data</a>, ETH supply increased to 120.28 million ETH. In the last 30 days, 77,091 ETH entered circulation. The current annual inflation returned to positive levels, showing an inflationary trend at 0.583%.
<img loading="lazy" loading="lazy" decoding="async" class="wp-image-380260 aligncenter" src="https://coin-turk.com/wp-content/uploads/2024/08/ETH-Arz.png" alt="" width="969" height="502">
The 30-day burn amounted to 19,438 ETH, so subtracting this from the above issuance figure gives a net excess of 57,653 ETH in circulation. The burn mechanism introduced with the London Hard Fork created a deflationary environment for a while, but subsequent updates that reduced transaction fees and made Layer2 solutions about 90% cheaper changed things.
<h2 style="text-align: justify" id="what-will-happen-to-ethereum-eth">What Will Happen to Ethereum (ETH)?</h2>
The inflationary environment seems to continue for ETH. Increased interest in restaking platforms like EigenLayer accelerates the growth rate of supply along with rewards. In just one week, EigenLayer’s total locked value increased by 11%. This and the growing interest in other platforms indicate that contributions to the inflationary environment will continue.
The biggest advantage here would arise from the rapid strengthening of demand through the ETH ETF channel. ETH issuers cannot stake and transfer this income to their customers, thus they do not contribute to the inflationary environment. Still, even in the worst-case scenario with 1% to 5% inflation, the sustainability of ETH price should not be massively negatively affected. Many cryptocurrencies have grown for years despite double-digit inflation, and considering the ETF support for ETH, we should not see major negative results in the medium term with increasing demand in secondary markets.
Of course, stories that deflation supports the price and that there could be a long-term supply shortage have evaporated in light of all the above details. This can be seen as a loss of potential profit.
<h5>The post first appeared on COINTURK NEWS: <a href="https://en.coin-turk.com/ethereum-faces-inflationary-trends-despite-supply-mechanisms/" data-wpel-link="internal" rel="noopener noreferrer nofollow">Ethereum Faces Inflationary Trends Despite Supply Mechanisms</a></h5>
The post <a href="https://en.coin-turk.com/ethereum-faces-inflationary-trends-despite-supply-mechanisms/" data-wpel-link="internal" rel="noopener noreferrer nofollow">Ethereum Faces Inflationary Trends Despite Supply Mechanisms</a> appeared first on <a href="https://en.coin-turk.com" data-wpel-link="internal" rel="noopener noreferrer nofollow">COINTURK NEWS</a>.

Ethereum Faces Inflationary Trends Despite Supply Mechanisms

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