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Ethereum Inflation Concerns Rise After 73 Consecutive Days of Supply Growth


Inflationary Spell
Ethereum (ETH) has been a popular cryptocurrency in the market for a long time, known for its potential to bring about a deflationary economy. However, recent data has shown that ETH is currently experiencing its longest inflationary spell since transitioning to a Proof-of-Stake (PoS) model. Many investors and analysts are concerned about what this could mean for the future of the cryptocurrency.
What is a Deflationary Economy?
A deflationary economy is one where the value of the currency increases over time, rather than decreasing. In the case of Ethereum, this would mean that the supply of ETH would decrease as more tokens are burned or removed from circulation. This is a desirable outcome for many investors, as it means that their holdings will increase in value over time.
Transition to PoS Model
Ethereum made the switch from a Proof-of-Work (PoW) model to a PoS model in December 2020. This transition was highly anticipated and seen as a step towards a deflationary economy for ETH. PoS is a more energy-efficient and environmentally friendly way of validating transactions on the blockchain. However, it seems that this switch may have had an unintended consequence.
Inflationary Spell Since Transition
Data from Glassnode, a blockchain analytics firm, shows that ETH has been experiencing an inflationary spell since the transition to PoS. This means that the supply of ETH has been increasing, rather than decreasing as expected. This can be attributed to the rewards given to validators on the PoS network, which increases the supply of ETH.
Concerns and Future Outlook
The current inflationary spell has caused concern among investors and analysts, as it goes against the initial expectations for Ethereum's transition to PoS. However, some argue that this is just a temporary setback and that the long-term benefits of PoS will still lead to a deflationary economy for ETH. Only time will tell how this inflationary spell will affect Ethereum's future, but for now, it is important for investors to keep a close eye on the situation.
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