According to a report from “The Block,” analysts from blockchain data analysis company CryptoQuant stated that the Dencun upgrade on the Ethereum blockchain has caused Ether (ETH) to experience inflation again, potentially undermining its status as an “ultra-sound” currency.
In a report released on Wednesday (8th), CryptoQuant mentioned that due to the decrease in transaction fees on the Ethereum network following the Dencun upgrade completed on March 13, the amount of ETH burned has dropped to one of the lowest levels since the merge upgrade. The report also noted that the supply of ETH is growing daily at one of the fastest rates since the network merge.
According to CryptoQuant analyst:
The report indicates that based on the current network activity, Ethereum is unlikely to experience deflation again, and the narrative of Ethereum as an “ultra-sound” currency may have disappeared or requires higher network activity to revive.
The supply change of Ether since the merge upgrade, source: ultra sound money
According to the introduction on the Ethereum data website “ultra sound money,” “ultra-sound money” is a meme on Ethereum that primarily focuses on the possibility of a decrease in ETH supply. This meme originated from Ethereum co-founder Vitalik Buterin, who jokingly mentioned the term “Supersonic money” when discussing currencies with negative circulating supply growth in 2020. Later, Ethereum researcher Justin Drake extended this concept to “ultra-sound money” when describing the supply changes of Bitcoin and Ether.