LAGOS (CoinChapter.com) — The Ethereum ecosystem transition to a proof-of-stake consensus mechanism has not had the desired effect, as the network token has turned deflationary in the past five days.
In detail, the Ethereum network has entered its most extended period of token deflation since the Merge. Data from Ultra sound money indicated that since Oct 8, the supply of Ethereum (ETH) in circulation has dropped by over 4,000 tokens.
Notably, a lower supply of digital assets in circulation means that fewer of them are available to the general public. This generally leads to an increase in its value. However, despite the drop in ETH supply, the token has failed to experience a boost and is currently stuck in a bearish trend.
ETH’s price has fallen some 6% in the same period and currently stands around $1,250 at the time of publication. Interestingly, according to data from Coingecko, Ethereum’s value has fallen more than Bitcoin’s since the underlying crypto technology shifted to PoS.
Since Sept 15, the Merge date to today, Ethereum is down 25%. However, Bitcoin dropped only 12% in the same period. Additionally, on the day, ETH price was also down by almost 4%, its market capitalization plummeting to about $149 billion.
ETH Gas Fees Skyrocket Following XEN Launch
Meanwhile, Ethereum gas fees also surged in recent weeks following the launch of a new token airdrop. The smart contract network’s users have rushed to mint XEN (the newly launched project token) straight to their wallets for free. As a result, the average gas fees on the Ethereum network spiked by almost 218%.
Recall that Ethereum transactions require gas fees, increasing security by preventing the network from overloading with malicious requests. The greater the traffic on the Ethereum network at a given time, the higher gas fees will soar.
Notably, Ether’s gas fees are usually held by the validators who process all ETH transactions. However, since EP-1559 last August, a portion of every gas fee has also been destroyed to automate transaction prices and limit the supply of ETH.
Consequently, according to its tweet, XEN token transactions have accounted for 40% of all gas used on the Ethereum network.
The token, which debuted this weekend, started with no supply but was free to mint. Asa result of the high demand, the token’s price rocketed from a fraction of a cent in value to $1.04. However, in about five minutes, XEN crashed down to slightly less than a cent before plummeting to a near-zero.
Retail Interest In Ethereum Drop To Yearly Low
Additionally, it is all negative news from the Ethereum ecosystem as retail interest in the token has dropped yearly. Data from Google Trends revealed that the search for the term ‘Ethereum’ has fallen to 26 from last month’s high of 91.
Google Trends uses numbers to represent search interest, with ‘100’ as the peak popularity for the specific term. Although, it’s worth noting that high interest doesn’t necessarily imply an increase in asset price or a rise in actual buying.
Google Trends revealed that at the beginning of the year, searches for Ethereum stood at their peak of 100.
However, joining the entire crypto market in the recent downtrend, the search for Ether plunged to a low in April. It, however, recovered and attained the highest position again in July before dropping to a yearly low this month.
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