Data on the chain shows that after the London hard fork, the supply of Ethereum has hardly changed. This means that ETH is now becoming a scarce asset.
Following the London fork, the rate of change in the supply of Ethereum dropped to close to zero
As CryptoQuant pointed out postal, With the rate of change dropping to almost zero, the supply curve of ETH is now almost flattening out. This makes assets scarce.
The Ethereum supply indicator tells us the total amount of ETH currently in circulation. Since miners receive block rewards (in ETH) for mining blocks, the total supply will increase over time.
A related metric, the rate of change in the supply of Ethereum shows how fast or slow the total circulating supply is rising.
ETH’s supply method is different from Bitcoin; the latter has locked in its potential total supply from the beginning. This means that miners may run out of BTC for mining.
Ethereum has no such limit, so miners can keep it indefinitely and the supply will continue to increase. This is problematic for cryptocurrencies because it leads to higher volatility.
this London hard fork Exists to solve this problem. As you know, to complete a transaction on the ETH network, you need to pay a gas fee. This fee was originally given to miners. Who makes these coins recirculate? But since the London fork, the fee has been “burned” and miners no longer receive it.
Now, burning is a deflationary measure because it reduces the total supply. Miners are still mining ETH, but burning makes up for the mining volume.
This is a chart showing the impact of the London fork on the supply of Ethereum:
ETH's supply curve seems to be flattening | Source: CryptoQuant
As you can see in the figure above, the rate of change of Ethereum supply is at EIP-1559 emission.
This leads to a flattening of the total circulating supply. Now, ETH is also becoming a scarce asset, just like Bitcoin. Due to the dynamics of supply and demand, the limited supply may push up the price of cryptocurrencies.
Related Reading | Ethereum miners earn more than Bitcoin in 2021
At the time of writing, Ethereum price Floating around US$45,700, it has risen by 2% in the past 7 days. In the past month, the value of cryptocurrencies has risen by 30%.
The chart below shows the trend of token prices in the past five days.
Ethereum's price has crashed in the last few days after setting a new all-time high | Source: ETHUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com