Ethereum's Dencun upgrade has sparked concerns about inflationary risks, as the amount of ether burned has dropped to its lowest levels since the Merge. According to CryptoQuant, the upgrade has made ether inflationary again, potentially ending its status as "ultra-sound" money.

The daily growth rate of ether supply is at its highest since the Merge, and the number of fees burned has become independent of network activity. Despite this, Ethereum is expected to remain deflationary for the time being, but the idea of it as "ultra-sound" money may require greater network activity to revive.

The upgrade, which took place on March 13, 2024, has improved efficiency and lowered Layer 2 transaction prices, but cryptocurrencies continue to decline, with Ethereum falling 19% in the last 30 days.

The Dencun upgrade has ended Ether's deflationary streak, causing concerns about its inflationary risks . Ether supply increased to 120.1 million, a small but significant rise, as the upgrade made median transaction fees four times cheaper.

This change may end Ether's status as "ultra-sound" money. Despite this, Ethereum's strength lies in decentralized applications, making it distinct from Bitcoin's sound money narrative. Over 419,713 Ether tokens were burned since the Merge, but the current supply growth is at its highest level since the upgrade.

The upgrade, which went live two months ago, allows more data storage in "blobs" on the Ethereum network, enhancing efficiency and reducing Layer 2 transaction costs.