ETH turns deflationary as gas charges increase during the recent price rally

Ether became deflationary as gas fees hit 15GW amid the recent price hike. This takes place months before the long-awaited Shanghai Upgrade, which promises to allow ETH players to withdraw from the Beacon deposit contract.

  • information from Ultrasound Revealing that ETH has become deflationary again. This is happening for the first time since December 1.
Source: Ultrasound Money
  • There is currently about 30 less ETH in circulation than there was in circulation when the merger took place last year, making Ether a deflationary cryptocurrency, at least for now.
  • The reason this is possible is the network’s transition to Proof of Stake, as well as the implementation of EIP 1559.
  • Introduced back in 2022, EIP 1559 has enabled the burn mechanism, which destroys ETH collected from fees associated with verifying transactions on the network. The higher the fee, the higher the burn rate.
  • Now that Ethereum is no longer running on a Proof-of-Work consensus algorithm, new ETH issuance has dropped dramatically and with ETH being burned as a result of EIP-1559, the cryptocurrency is temporarily deflationary.
  • It should also be noted that this happens two months before the release of the Shanghai Upgrade. It is expected to hit the public network in February and the main network in March.
  • The upgrade is promised to enable ETH players to opt out of the Beacon deposit contract.

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