CryptoQuant: The total amount of Ethereum burning fees has decoupled from network activity, and the Dencun upgrade has caused ETH to inflate again

ChainCatcher news, analysts from the data company CryptoQuant stated that the Dencun upgrade has made Ethereum inflationary again, which may undermine its low-inflation currency characteristics. Due to the Dencun upgrade, the amount of Ethereum burned has fallen to one of the lowest levels since the merge, when Ethereum transitioned from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism, and the supply of Ethereum is growing at the fastest daily rate since the network merge.

CryptoQuant analysts noted that prior to the Dencun upgrade, higher network activity on Ethereum meant higher burning fees, resulting in a lower supply of Ethereum. However, after the Dencun upgrade, the total burning fees have decoupled from network activity.

The report concludes that at the current rate of network activity, Ethereum is unlikely to experience deflation again, or it will require higher network activity to revive.