The post Ethereum inflation slashed in half, L2 expenses soar appeared on BitcoinEthereumNews.com.

Ethereum (ETH) is turning the tides on L2 applications. In the past month, fees to use the L1 network started growing.  Ethereum (ETH) is leaving behind its period of ultra-low fees and is becoming more expensive for L2 apps. The right balance between L1 and L2 has not been struck and is still shifting. There is no consensus whether it’s better to have expensive ETH services or let L2 retain their fees.  Ethereum fees rose from under $1M daily to more than $7.98M per day as of September 23. The days of gas fees under 1 GWei are also gone, and gas rallied to 45 GWei for regular transactions. Ethereum’s L1 can switch to being highly expensive relatively fast, as it happened in the span of two weeks.  Along with the increased gas fees, ETH went through a price recovery. The token increased its market dominance to 14.2% while trading at $2,640.54. Ethereum inflation slashed in half Higher gas prices immediately lead to a more active token burn in each block. As a result, Ethereum inflation fell from a recent peak at 0.74% annualized, down to 0.33%. Inflation rates can vary within even the span of a day,  The lower ETH production means each year, a projected 550K ETH will be created, instead of over 990K ETH. Each week, 7,272 additional ETH are added to the circulation, instead of close to 16K ETH. Ethereum’s inflation is also lower compared to other leading chains. Even with extra new token production, inflation since the all-time high is a net 1.51%. At the same time, the main competitor Solana (SOL) expanded its supply by more than 55% since 2021.  Even if Ethereum inflation is small, it can affect the ecosystem of L2 apps and the flows from Ethereum onto those platforms. Ethereum is…

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Filed under: News - @ September 24, 2024 7:24 pm