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The Ethereum network is currently undergoing a major transformation, marked by a historic reduction in gas fees. This situation has significant consequences on the supply of Ethereum, which has become inflationary! Sending the crypto soaring to $3,300 in 24 hours.
Drop in Ethereum Gas Fees: Crypto Soars!
Over the past 24 hours, Ethereum has recorded an increase of 1.11%, currently trading around $3,309! This increase comes in a context where gas fees on the crypto network have reached historically low levels, falling to an average of 4 Gwei. This reduction in transaction fees has led to a decrease in the amount of ETH burned, making the supply of Ethereum inflationary. Indeed, less than 200 ETH have been burned in the last 24 hours, contributing to a supply growth rate of 0.67%.
This drop in gas fees is primarily due to the increasing adoption of layer 2 scaling solutions and the introduction of blob transactions with the Dencun hard fork in March. These improvements have significantly reduced transaction costs on layer 2 networks, thus influencing the entire Ethereum network.
Network Perspectives
The drop in gas fees on the Ethereum network has both short-term and long-term impacts. In the short term, it makes crypto transactions more affordable, encouraging increased network usage and potentially raising the value of ETH. In the long term, this fee reduction decreases the amount of ETH burned, thereby increasing the total supply, which could exert downward pressure on the price of ETH. However, broader adoption of layer 2 scaling solutions could offset this effect by increasing demand for ETH. Managing these dynamics will be crucial for Ethereum’s future.
Despite these challenges, some analysts remain optimistic about Ethereum’s future. They believe that the fee reduction makes the network more accessible for end-users and that the inflow of new capital is a positive sign for the crypto ecosystem. Managing the supply and inflation of Ethereum will be crucial for its future development.
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The world is evolving and adaptation is the best weapon to survive in this undulating universe. Originally a crypto community manager, I am interested in anything that is directly or indirectly related to blockchain and its derivatives. To share my experience and promote a field that I am passionate about, nothing is better than writing informative and relaxed articles.
DISCLAIMER
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.