Ethereum Supply Surges to 120.5M—Is ETH’s Stability at Risk?
Dencun Update and Leadership Tensions Raise Concerns Over Ethereum’s Future
Ethereum’s circulating supply has hit an all-time high of 120.5 million ETH, the largest increase since January 2023. This milestone raises concerns about Ethereum’s long-term supply control and its reputation as “ultrasound money.” The surge, reminiscent of The Merge upgrade on September 15, 2022, was highlighted by Astaria CEO Justin Bram, sparking discussions on its potential impact.
How the Dencun Update is Driving Ethereum’s Supply Increase
Ethereum’s supply surge is directly linked to the Dencun update, which introduced a new transaction fee structure. According to Presto Research expert Jaehyun Ha, this update allows for blob transactions using “blob gas” units, reducing the amount of ETH burned per transaction.
Key consequences of this change:
- Higher transaction volume is now accommodated more efficiently.
- Less ETH is being removed from circulation, leading to a supply increase.
- Ethereum’s supply control measures have weakened, raising inflation concerns.
What Else is Affecting Ethereum’s Market Stability?
Aside from technical changes, Ethereum’s governance is also facing challenges:
- Block Gas Limit Raised: Ethereum’s block gas limit has been increased to 31 million, marking the first adjustment since 2021. This change aims to boost scalability but could further impact supply dynamics.
- Leadership Controversy at Ethereum Foundation: A proposal to appoint Danny Ryan as the Ethereum Foundation leader was rejected by co-founder Vitalik Buterin. This has led to developer unrest, with some key figures reportedly leaving the project.
Ethereum Price Struggles Amid Uncertainty
- Despite a slight price rebound, ETH remains down over 12% for the week.
- Investors are wary of Ethereum’s shifting supply mechanics, which could challenge its deflationary narrative.
- Continued leadership disputes may weaken market confidence in Ethereum’s long-term vision.
What’s Next for Ethereum?
With supply increasing and internal tensions rising, Ethereum faces a critical period of uncertainty. While the network continues evolving, its reputation as a deflationary asset is now in question.
Will Ethereum’s supply growth impact its long-term value? Will governance challenges slow down future upgrades? The coming months will be pivotal in determining Ethereum’s position in the market. Investors and developers alike will need to watch these developments closely.
