Key Points
- Ethereum’s inflation rate has increased following the introduction of blobs in March.
- Analysts are divided on how to tackle this inflation, with suggestions including increasing blob fees or encouraging more use of L2s.
The inflation rate of Ethereum (ETH) has been on the rise since the introduction of blobs in March.
Analysts are now suggesting that the current Ethereum blobs should be revised in order to combat this inflation and allow the altcoin to accumulate value for its layer 2s (L2s).
The Issue with Ethereum Blobs
Before the implementation of blobs, L2s were significant consumers of ETH gas.
This high gas usage led to a high burn rate, which had a deflationary effect on ETH.
However, the introduction of blobs has made heavy transactions on L2s cheaper, reducing gas usage on L1 and affecting the burn rate.
This has resulted in ETH becoming inflationary since the implementation of blobs.
One analyst, Cygaar, has suggested that blob fees should be increased in the short term to address this issue.
He believes that if the usage of L2s increases, it could lead to a higher ETH burn rate and help ETH regain its deflationary status.
Contrasting Opinions
However, not everyone agrees with Cygaar’s assessment.
Ethereum community member Ryan Berckmans believes that it is too soon to make a decision on the matter.
He argues that the initial launch phase of blobspace and L2 maturation should be completed before any decisions are made.
Berckmans suggests that an increase in demand for blob spaces would naturally lead to an increase in the burn rate and fees to L1.
Doug Colkitt, Founder of Ambient Finance, counters this view by pointing out that small dollar-sized transactions on L2s dominate, making blob saturation unlikely to significantly increase the Ethereum burn rate.
The community is divided on the issue, with some calling for a prompt response to ETH’s inflationary status, while others believe it would be hasty to make changes so soon after the introduction of blobs.
As the debate continues, Ethereum is struggling to maintain its value, with the altcoin down by 38% since the introduction of blobs.
