Are you worried about ETH becoming inflationary again?

[KryptoBull]

With the launch of EIP-1559 in 2021, ETH became a deflationary asset as the amount of ETH burned from transaction fees exceeded the new block rewards for miners/stakers ^[1]. However, as the number of transactions on the Ethereum blockchain decreased due to the crypto market downtrend and the success of Layer-2 solutions, the amount of ETH burned also decreased and ETH became inflationary again ^[2].

This could make many ETH investors anxious as inflation often accompanies an increase in selling pressure in the market, especially in the context of the spot ETH ETF becoming a profit-taking event for many holders and ETH price has decreased instead of increasing as they expected. However, I believe this is necessary for the market to re-accumulate before welcoming an uptrend.

For me, ETH's inflation is not a bad thing, as we all know that in economics inflation is less bad than deflation. If ETH wants to become the currency of the world, it needs inflation to meet the increase in global assets. BTC is also an inflationary asset, which means that ETH's inflation is not too serious. It's just a reason for many investors to explain the short-term decline in ETH's price.

I still believe that this season, spot ETH ETFs, Layer-2 and RWA trends will be able to help ETH increase in price and continue to become a deflationary asset thanks to the vibrant Ethereum ecosystem. ETH will always be in my portfolio until it reaches my target. Inflation is not an issue, ETH price has grown well before EIP-1559 was introduced.

I would like to know your opinion on this issue:

• Do you think the current inflation is a failure of Ethereum?
• Do you believe that this inflation will end soon and ETH will continue to deflate?
• Will you still invest in ETH even if it continues to be inflated?

References:
[1] What is EIP-1559? How Will It Change Ethereum?
[2] Ethereum supply turns inflationary as gas fees drop to record lows
Note:

• My opinion has been presented in a topic, on BitcoinTalk forum.
• This topic on AltcoinsTalks forum has included a minor change in the way my opinion is presented.
• This statement is to avoid accusations of plagiarism.

[ABCbits]

https://ultrasound.money/ estimate the supply growth is about 0.67% per year. AFAIK it's lower than inflation target on some country. Besides, occasionally we see people share that they unable to access their ETH, which leads to less available supply. So i wouldn't worry about ETH being inflationary for now.

[MrSpasybo]

I would like to know your opinion on this issue:

• Do you think the current inflation is a failure of Ethereum?
• Do you believe that this inflation will end soon and ETH will continue to deflate?
• Will you still invest in ETH even if it continues to be inflated?

1. Inflation or deflation depends on the network condition. The EIP-1559 upgrade is still functioning as intended and is not a failure of Ethereum. The development of Layer-2 should also be viewed in the long term as it attracts more users and capital to the Ethereum ecosystem, it does not hinder Ethereum development.

2. I believe that when the market is active and a bullrun occurs, the number of transactions will increase, the Ethereum network will burn more ETH in fees, and ETH will again become deflationary as it was in the bullrun 2021.

3. ETH has seen impressive price increases due to the development of technology and the ecosystem, not just due to the token's deflation, so when making investment decisions, I rarely consider whether ETH is deflationary or inflationary.

[KryptoBull]

1. Inflation or deflation depends on the network condition. The EIP-1559 upgrade is still functioning as intended and is not a failure of Ethereum. The development of Layer-2 should also be viewed in the long term as it attracts more users and capital to the Ethereum ecosystem, it does not hinder Ethereum development.

2. I believe that when the market is active and a bullrun occurs, the number of transactions will increase, the Ethereum network will burn more ETH in fees, and ETH will again become deflationary as it was in the bullrun 2021.

3. ETH has seen impressive price increases due to the development of technology and the ecosystem, not just due to the token's deflation, so when making investment decisions, I rarely consider whether ETH is deflationary or inflationary.

I also think that most investors don't pay much attention to this news. It's just something used to explain the disappointing short-term price drop of ETH after spot ETFs were introduced to traditional investors.

In the future, when ETH price increases, we will see the Ethereum ecosystem become more vibrant again, ETH burn will increase, and ETH will become deflationary once more. Deflation and ETH price increases go hand in hand, but they don't have a direct causal relationship as we often read and hear in crypto media.

[Stompix]

https://ultrasound.money/ estimate the supply growth is about 0.67% per year. AFAIK it's lower than inflation target on some country.

Yup, but that's for fiat money, you don't really want something that would be a hedge against inflation to experience permanent inflation. The issue they will face eventually is the same as BTC, no fees but need to have people staking is the same as no fees but needing ASICs, you won't have people staking for 0.5% a year and you won't have people pay $100 in gas.

Wait till this L2 spills into Bitcoin as already the fees are 2% of the total but unlike ETH we have a fixed reward.

[bitterguy28]

• Do you think the current inflation is a failure of Ethereum?

just like your opinion, i do not consider it as failure as its inflation is most likely just a reaction to other factors in the market it still has potential to deflate later on as these factors can be reduced or controlled

• Do you believe that this inflation will end soon and ETH will continue to deflate?

a lot of people including myself believe that altcoin season has not really properly started just yet and when the time comes that eth will have more transaction volumes it might get deflated again

[bitterguy28]

Please delete Admin , double posting because of bad internet ..thanks

[ABCbits]

https://ultrasound.money/ estimate the supply growth is about 0.67% per year. AFAIK it's lower than inflation target on some country.

Yup, but that's for fiat money, you don't really want something that would be a hedge against inflation to experience permanent inflation.

That's true. Although in past, people don't expect ETH to be a hedge against inflation due to uncle block mining reward, vague issuance model and lack of EIP-1559.

The issue they will face eventually is the same as BTC, no fees but need to have people staking is the same as no fees but needing ASICs, you won't have people staking for 0.5% a year and you won't have people pay $100 in gas.

Wait till this L2 spills into Bitcoin as already the fees are 2% of the total but unlike ETH we have a fixed reward.

Although unlike BTC, i expect here would be less complaint to increase block size, minimum fee rate or other approach to mitigate the problem on ETH network.

[Stompix]

Although unlike BTC, i expect here would be less complaint to increase block size, minimum fee rate or other approach to mitigate the problem on ETH network.

Eh, the whole thing is different, while in Bitcoin everyone can push for an idea with Ethereum is far more linear, you watch what Buttercup says and plans to do and you know where it's going, it makes no sense making plans since there won't be any community vote for real anyhow.
Besides, most of ETH users have come on board when experiencing high fees, they don't have the same memories of half-a-cent fees and they also don't care much about centralization, look how PoW to  Pos went, for most ETH is a money-making machine!

[Husires]

 supply growth is less than 2%, the situation is still good and we cannot say that the asset has become inflationary in a way that puts pressure on the price and forces investors to sell, but in the long term, if there is not a significant increase in demand or a continuation of low fees and transactions are conducted on the mainnet instead of layer 2 Then that will be the problem.

[yhiaali3]

I don't think the current inflation is Ethereum's failure, this is not the first time and Ethereum has overcome it, the price will rise again and Ethereum transactions will start increasing and burning more fees.

Personally, I don't care about inflation and I will continue to invest in ETH even if inflation continues because Ethereum is simply second in the market after Bitcoin, and like Bitcoin it has only one upward trend in the long term, the factors encouraging investment in Ethereum are much greater than those problems that appear from time to time.

[|MINER|]

I would like to know your opinion on this issue:

• Do you think the current inflation is a failure of Ethereum?
• Do you believe that this inflation will end soon and ETH will continue to deflate?
• Will you still invest in ETH even if it continues to be inflated?

It's really a worried think when a coin have unlimited supply but if we notice in case of Ethereum coin then even it has an unlimited supply but if you look at the increase rate what I found in this topic replies it's very tiny.  I don't think it will be affected it so much in the future .
So I think Etherium will be still a good opportunity for investment and gain some profit for long-term. So yes I will not stop my investing on Ethereum I want to increase it gradually.

[KryptoBull]

It's really a worried think when a coin have unlimited supply but if we notice in case of Ethereum coin then even it has an unlimited supply but if you look at the increase rate what I found in this topic replies it's very tiny.  I don't think it will be affected it so much in the future .
So I think Etherium will be still a good opportunity for investment and gain some profit for long-term. So yes I will not stop my investing on Ethereum I want to increase it gradually.

I once heard someone say that Ethereum's inflation before EIP-1559 was a feature, not a bug of the protocol. But this seems to have been forgotten as everyone focused on the profits from ETH's price increase and the narrative of deflation and increasing scarcity became more attractive.

I believe that ETH holders are also not too concerned about ETH's inflation. Like you, they will continue to hold and buy ETH with the expectation of profits in the uptrend in 2025. I even think that with the success of L2, ETH can easily reach 10K USD next year.

[ABCbits]

Although unlike BTC, i expect here would be less complaint to increase block size, minimum fee rate or other approach to mitigate the problem on ETH network.

Eh, the whole thing is different, while in Bitcoin everyone can push for an idea with Ethereum is far more linear, you watch what Buttercup says and plans to do and you know where it's going, it makes no sense making plans since there won't be any community vote for real anyhow.

But looking at the past, ETH block gas limit has been raised many times[1-2]. So it wouldn't be surprising if it's increased again, regardless of how ETH community feels.

Besides, most of ETH users have come on board when experiencing high fees, they don't have the same memories of half-a-cent fees and they also don't care much about centralization, look how PoW to  Pos went, for most ETH is a money-making machine!

Fair point.

[1] https://blog.mycrypto.com/the-history-of-ethereums-block-size-block-gas-limit
[2] https://goto.etherscan.com/chart/gaslimit

[Faisal2202]

I would like to know your opinion on this issue:

• Do you think the current inflation is a failure of Ethereum?
• Do you believe that this inflation will end soon and ETH will continue to deflate?
• Will you still invest in ETH even if it continues to be inflated?

1. No I don't think current inflation is a failure of Ethereum because if there was no layer 2 solutions then people would have completely stopped the usage of ETH besides those mining them and in order to mine they also require a good amount of ETH as well. And what if in the end that's not profitable for them? The point is, that inflation is necessary layer 2 solutions were necessary. If there were no Layer 2 solutions then there was a chance that people would stop using it all due to the high fees.

2. This inflation might not end because people using other networks won't use the main network, but there are many projects providing airdrops to airdrops hunters and these hunters are performing different financial activities on Eth Main-Network in order to get airdrops.

3. I will still invest in ETH because of ETF.