Ethereum Flips to Inflationary Trend as Spot ETF Attracts Fresh Inflows

Leading blockchain network Ethereum transitioned from a deflationary to an inflationary state amid a lower burn-to-mint ratio in the first half of 2024.

CoinGecko, an independent crypto data aggregator, recently reported that Ethereum emitted 540,958 ETH while only 465,657 ETH were burned from the beginning of 2024. This shift marks a significant reversal in Ethereum’s token economics, netting a total increase of 75,301 ETH in its circulating supply.

After observing Ethereum’s deflationary characteristics between Q4 2022 and Q1 2024, with emissions totaling 220,454 ETH and burns reaching 333,555 ETH, the network experienced a reversal in Q2 as activity decreased, pushing Ethereum into an inflationary phase.

CoinGecko noted that in Q2 2024, the Ethereum network emitted 228,543 ETH while burning only 107,725 ETH, resulting in an increase of 120,818 ETH in circulation. Notably, July 2024 experienced the lowest monthly burn rate on record for the year, with just 17,114 ETH burned, marking a significant 35.0% decline from June’s figures.

It's worth noting that since the implementation of EIP-1559 in June 2021, which established a mechanism for burning part of the transaction fees, Ethereum has burned over 400,000 ETH. To date, the cumulative total of ETH burned has reached 4.36 million.

Uniswap Leads in ETH Burning

notably, Uniswap has burned 71,915 ETH in 2024, including 2,470 ETH in July alone. Behind Uniswap, ETH transfers and Tether (USDT) transactions are major contributors to the burn mechanism.

To date, ETH transfers have led to 33,538 ETH being burned, while Tether’s activities have removed 23,332 ETH from circulation this year. Other platforms also participate in burning ETH, albeit to a lesser degree.

As Ethereum’s supply grows, the recent surge in investor interest in the second-largest cryptocurrency is also being highlighted by a $4.9 million net inflow into the Ethereum spot ETF. This marks the first inflow in four trading days, as Ethereum's 3% price gain outperformed major assets like Bitcoin and Solana.

With the growing supply, driven by emissions outpacing burns, and the renewed investor confidence highlighted by the ETF inflow, we can observe the complex dynamics at play within Ethereum’s ecosystem.

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