I have an AVR code where I store data in EEPROM, this data is actually some settings and USER phone numbers. These are quite often accessed. So I planned to read all the values at start-up to memory at the start-up. and then use only those values instead of reading them from EEPROM whenever required. This method is OK but it uses a lot of data memory. So now my plan is to read from EEPROM whenever I need to use that variable. Is this OK, will it affect the EEPROM???
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What you're planning is fine, only writing (or more specifically usually erasing) data causes endurance issues with an EEPROM. There's a related question How does memory wear out? that goes into some more details of what causes that effect.