Ethereum
Ethereum blockchain experienced its highest period of inflation in the last quarter: Fidelity
The Ethereum blockchain experienced its highest period of inflation in the last quarter with around 110,000 ethers (ETH) added to total supply, which equates to an annual inflation rate of 0.37%, Fidelity Digital Assets said in a report last week.
“While dramatic swings in Ether supply are unlikely in the short to medium term, the growing preference for lower-cost Layer 2 platforms and increasing demand for staking suggest that inflationary quarters could become more frequent,” wrote analysts Daniel Gray and Max Wadington.
The number of validators on the network has increased by 5% since April, according to the report, and the recent introduction of resttaking could further increase demand for staking.
Spot Ether exchange-traded funds (ETFs) will be available for trading in the United States for the first time later Tuesday. While their introduction will broaden access to the cryptocurrency, some leading firms have warned that initial request for these spot ETFs, returns could be lower than expected.
Following the Dencun Upgrade In the first quarter, Fidelity notes that “adoption of Layer 2 platforms has been impressive,” with Layer 2 transactions increasing by around 20% and that the success could be a positive indicator for the future of the Ethereum network. Layer 2 are separate blockchains built on top of the base, or layer 1, blockchains.
Ether is currently trading about 67% above its realized price, which was $2,050 toward the end of the second quarter, the note said. This is the highest level since its inception, despite ETH remaining well below its 2021 highs. The realized price is a metric that attempts to capture the average cost of all current ETH holders. Ether was trading around $3,526 at the time of publication.
This could indicate that “investors are more comfortable investing in ether compared to 2021 highs,” Fidelity said. After a strong start to the year, Fidelity notes that Ethereum’s base layer fundamentals all declined in the second quarter. New monthly addresses fell 16%, active addresses fell 14%, and transaction counts declined 9%.
However, as the Layer 2 ecosystem continues to thrive, “the influence of Layer 1 metrics on valuation is expected to diminish,” the report adds.