Key Points
- Ethereum’s supply has surged to levels unseen in over two years, now standing at 120,521,523 ETH.
- Experts speculate that the Dencun upgrade and changes in gas fees may have contributed to this increase.
The supply of Ethereum’s ETH has soared to a level not witnessed since more than two years ago. This surge was revealed by data from ultrasound.money, which showed the total supply of Ethereum at 120,521,523 ETH.
This number is 383 ETH more than the amount recorded on the day of The Merge upgrade in September 2022. Given this development, experts are pondering what could be the cause of this increase and its potential impact on the coin and its ecosystem.
Impact of Dencun Upgrade and Changes in Gas Fees
Some analysts are attributing this surge to Ethereum’s Dencun upgrade, suggesting it could pose significant risks to ETH in the future. This upgrade, implemented last year, fundamentally altered the way transaction fees are processed.
With the introduction of blob transactions, which are designed to handle large data more efficiently, the routine burning of a substantial portion of Ethereum transaction fees to decrease overall supply was discontinued.
The new transactions have a different fee structure. According to Presto Research analyst Jaehyun Ha, this poses a serious threat to Ethereum’s status as ultrasound money. Despite Ethereum’s network activity remaining strong, the reduced fee burning rate suggests a high likelihood of continued supply increase, Ha noted.
Ethereum’s Supply Trend and Security Concerns
Ethereum’s supply began to decline shortly after The Merge. It continued to fall until it hit a low of approximately 120,064,500 ETH in April 2024.
However, the supply levels started to rise again once the Dencun upgrade was implemented in March. While a link has been established between the Dencun upgrade and ETH’s inflation, some experts believe other factors may also be at play.
Byoungjoon Kim of DeSpread Research, for instance, thinks that the supply increase is also driven by users migrating to other networks like Solana. This migration is not surprising given the ongoing memecoin frenzy, but users are also moving to various other Layer 2s that have recently emerged.
Kim warns that continued ETH inflation could weaken Ethereum’s security over time. He argues that the security of the network is closely tied to the value of its token. Therefore, if the supply continues to rise unchecked, it could affect ETH’s price stability and, in turn, the overall security of the network.
