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This past week, Ethereum made history with the release of the long-awaited Dencun upgrade to the mainnet, bringing a sense of relief and excitement to the user community. This upgrade is designed to mark an important step in the network’s expansion strategy, promising to enhance the scalability of the Layer 2 chain and usher in a new age of use cases.
Now, with the birth of Dencun, the Ethereum network has begun to reap the benefits of the sudden decrease in ether supply.
Ethereum’s latest upgrade, Dencun, left a strong impression in its first week of launch, especially in terms of reducing the total supply of ether. According to information from CryptoQuant, by midweek, the total ether supply had dropped to its lowest level since August 2022.
The last time ether’s supply decreased like this was during Ethereum’s most important moment, when the network switched from the original proof-of-work consensus to proof-of-stake, also known as Consolidation.
Over the past month, ether supply has decreased by 0.872%, which is the fastest decrease since May 2023. In contrast, since The Merge, the rate of decrease has been only 0.246%.
This rapid decline can be explained by daily transactions on Ethereum hitting record levels, with an average of over 1.2 million transactions, leading to more transaction fee burns and subsequently, total supply reduced.
Additionally, as of August 2022, more than 1.56 million ether were burned, while only 1.12 million ether was issued, resulting in a net decrease of more than 446,000 ether, or nearly 1.62 billion USD at current price.
Related: Ethereum Dips Below $4000 But Signals Remain Positive
If Ethereum continues to remain active and ether supply continues to decrease, this could lead to a significant growth in the token’s price. At this time, the price of Ethereum surpassed the $3600 mark.
Why is this important?
The Dencun upgrade marks the biggest step forward the Ethereum network has taken since The Merge. With a commitment to significantly reduce costs for the Layer 2 chain, coupled with a sharp increase in network activity and a decreasing ether supply, it can be expected that the price of Ethereum will continue to increase.
