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Ethereum inflation is falling – the reason for this, according to blockchain researchers

Ethereum’s daily spending rate fell below Bitcoin’s for the first time this week, according to a blockchain researcher.

Lucas Outumuro, research director at blockchain intelligence firm IntoTheBlock, says Ethereum (ETH) net inflation fell to an annualized rate of 1.11% mid-week, compared to Bitcoin’s annualized rate of 1.75%.

1 / For the first time, the daily spending of $ ETH was lower than that of $ BTC

ETH net inflation: 3574 ETH (1.11% annualized)

BTC net inflation: 900 BTC (1.75% annualized)

A quick thread on Ethereum’s recent spike in activity and the potential impact of its falling inflation 👇 pic.twitter.com/IBT9Vf3MNo

– Lucas Outumuro (@LucasOutumuro) August 27, 2021

Outumuro also says that Ethereum’s declining rate of emission could add a monetary reward to the second largest cryptocurrency by market capitalization, potentially allowing the asset to transfer value over time without users worrying about a possible loss of purchasing power.

“The decline in ether emissions raises questions about its valuation. Previously, the value of ETH approached “digital oil” in parallel with its use. Now that its emissions are proven to be lower (and potentially deflationary), it will likely develop a cash award like BTC. “

The blockchain researcher adds that craze for non-fungible tokens (NFT) contributed to the declining spending on Ethereum as it increased the fees generated, part of which is burned.

“The recent surge in NFT activity has significantly increased Ethereum fees and the amount of ETH that comes with it. This has resulted in several hours of more ETH being burned than spent, making it effectively deflationary in short periods of time. “

Finally, Outumuro says the deflationary pressures on Ethereum will help turn the second largest cryptocurrency into a store of value.

“As NFTs and other applications on Ethereum continue to grow, this creates deflationary pressures and strengthens Ether’s monetary reward. Ultimately, this is aimed at users and owners turning ETH into a store of value for the decentralized Internet. “

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Featured image: Shutterstock / andrey_l

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