Ethereum Network Activity Drop: What’s the Impact?
In recent months, user activity on the Ethereum network has decreased significantly.
This directly affects the token burning mechanism, which aims to reduce the amount of ETH in circulation by destroying some of the transaction fees.
As a result of the reduced number of transactions, the volume of ETH burned has decreased sharply, so that the supply of ETH in circulation has actually increased.
Based on information we quoted from the Beincrypto page, according to data from Ultrasound Money, in the last 30 days, around 72,927 ETH, equivalent to US$134 million, has been added to the supply, which has now exceeded 120 million ETH.
This decrease is also seen in the amount of ETH burned each day, which according to Etherscan, has plummeted by 95% throughout this year.
Migration to Layer-2 Solutions and Its Impact
One of the main causes of the reduced activity on the Ethereum main network is the shift of users and developers to Layer-2 (L2) solutions such as Arbitrum, Optimism, and Base.
These L2 platforms offer lower transaction fees and faster processing, making them an attractive option for many.
However, this move has reduced activity on the Ethereum mainnet, which has impacted the token burning system and, indirectly, the ETH supply.
- Bitcoin Approaches US$100,000: Technical and Fundamental Analysis
- Bitcoin Heading Towards $100,000: Trend Analysis and Market Sentiment
- Early Signs of a Bitcoin Bull Market Are Starting to Appear: Is It Time to Get In?
- Bitcoin Strengthens: Time to Increase Crypto Literacy
- XRP Price Outlook in May 2025: Between Optimism and Challenges
ETH Price and Future Outlook
Due to the increased supply and decreased network activity, the ETH price has come under pressure. Currently, ETH is trading around $1,821.
However, technical indicators such as the Relative Strength Index (RSI) suggest a possible recovery if buying pressure increases.
If network activity picks up again and demand increases, ETH could potentially surpass the $2,000 level again.
Conclusion
The decreased activity on the Ethereum mainnet, coupled with the move to Layer-2 solutions, has reduced the number of tokens burned, increasing the ETH supply, and depressing the price.
However, if Ethereum is able to increase network activity and attract users back, there is a chance for a price recovery in the future.
