The Ethereum network saw an increase in its circulating supply by more than 37,000 ETH in the last month post the Dencun upgrade. This resulted in a monthly inflation rate of 0.38%, marking a change from the deflationary trend Ethereum had been following since January 2023.

The Dencun upgrade, which was activated on March 13, 2024, with the EIP-4844, was designed to reduce transaction costs on Ethereum's Layer-2 through "proto-danksharding."

The upgrade aims to make the Ethereum network more efficient and cost-effective for its users, indicating progress in the adoption of ETH. However, it also resulted in a decrease in the amount of ETH being burned from gas fees, which had previously contributed to Ethereum's deflationary nature.

The data from the UltraSoundMoney platform shows a substantial increase of 37,789.04 ETH in the circulating supply within the last 30 days, mainly driven by staking rewards issuance compared to the amount burned.

Exploring the concept of "ultra sound money," the narrative emerged after the Merge upgrade combined with the fee-burn mechanism of EIP-1559. Investors had expectations of a deflationary circulating supply if the burned amount exceeded the issued amount, and this expectation was met, leading to a supply deflation of 0.21% annually.

With the Dencun upgrade in effect, CryptoQuant analyzed the impact on Ethereum's economic dynamics. Transaction fees were previously correlated with network activity, but with the implementation of EIP-4844, these fees have begun to decrease gradually.

It is yet premature to determine if Ethereum will shift back to being an inflationary cryptocurrency or if the lower transaction fees will attract more users, ultimately increasing the network's value. Investors are monitoring the situation closely to gauge the long-term implications of the Dencun upgrade on Ethereum's supply dynamics.