The Dencun upgrade has made ether inflationary again, potentially killing its characteristic as “ultra-sound” money, analysts at data firm CryptoQuant said.

A report released Wednesday by CryptoQuant said that due to decreased transaction fees on the Ethereum network because of the Dencun upgrade, the amount of ether burned has dropped to one of its lowest levels since the Merge, when Ethereum went from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism. The report added that the supply of ether is growing at its fastest daily rate since the Ethereum network's Merge.

"Before the Dencun upgrade, the higher network activity on Ethereum meant higher fees burned and hence less ether supply. However, after the Dencun upgrade, the total amount of fees burned has decoupled …