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Inflation Alert! Ethereum Records a Lower Issuance Level than Bitcoin’s

A lead analyst from IntotheBlock reveals that Ethereum’s inflation level is decreasing. According to a tweet, ETH currently has a lower supply rate. The tweet also explains that several factors are triggering a dip in the coin’s issuance level.

A Decrease in Purchasing Power?

The annual inflation rate of Ethereum hit 3574 ETH compared to bitcoin’s 900 BTC. This figure translates to a 1.11% decrease while Bitcoin’s rate stands at 1.75%. The tweet’s thread details some elements behind the numbers, one of them being the rise in NFT activity.

Users are growing interest in tokenizing real-world items such as art and collectibles. Creatives are also generating an income from publicizing their original work.

As such, a rise in NFT activity leads to higher ETH fees in the network. What’s more, it increases the asset’s burning procedures which causes a deflationary effect for a moment. Another reason that could decrease Ethereum’s inflation level is the network’s adoption.

The crypto has over 20 million addresses with Ethereum, signaling a growing digital asset community. The beacon chain implementation could also drive Ethereum’s deflationary level.

In normal circumstances, the coin generates its value from the usage rate. Outumoro’s data shows that Ethereum could change its monetary premium through deflation.

The Ethereum London Hard Fork

Ethereum’s London Hard Fork upgrade is a major change for the digital currency to move to a PoS ecosystem. The upgrade arrives with five proposals which kick off after the full ETH2 update. On the EIP-1559 proposal, miners are no longer going to earn transaction fees like before.

Instead, the transaction fees undergo a burning procedure cutting out the coin’s supply. At press time, the network has burned 119,428 ETH since the launch of the London Hard Fork in early August 2021. It equates to Ethereum worth $386,946,720, going by the coin’s recent prices.

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The EIP-1559 proposal may come as a major blow for miners who support and manage the network’s blockchain activities. Yet, ETH’s value could increase as the supply gets lower over time. Thus, a decrease in supply gives rise to a deflationary digital asset.

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