Definition ∞ ETH supply inflation refers to the rate at which new Ether tokens are introduced into circulation, increasing the total available supply of the cryptocurrency. This typically occurs through block rewards distributed to validators on the Ethereum network. The inflation rate is a fundamental economic characteristic influencing Ether’s scarcity and value.
Context ∞ Reports on ETH supply inflation are a constant subject in cryptocurrency news, especially since Ethereum’s transition to Proof-of-Stake. The network’s economic policy aims to control inflation, potentially leading to deflationary periods under certain conditions due to the EIP-1559 burn mechanism. Investors monitor the inflation rate to understand the long-term supply dynamics and potential price implications for Ether. A lower or negative inflation rate can positively influence market sentiment.
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