Helpful articles

Ethereum Supply Turns Inflationary First Time Post-Merge

Updated: Feb 22, 2023, 15:51 PM

Ethereum’s (ETH) annual token supply became inflationary again per data from ETH token supply has risen to 0.005% annualized inflation rate – after turning deflationary for the first time post-merge. This means that more ETH tokens are created than burned as a part of Ethereum’s fee-burning mechanism.

Ethereum Supply Inflation

ETH supply reverted to the current positive inflation rate on Dec 2 as the lack of network activity led to reduced demand. Put another way, the more on-chain transactions, the more ETH transaction fees get burned.

On a 30-day timeframe, the Ethereum network has been burning ETH at an annual rate of 560k tokens against the issuance of 622k tokens. This means that ETH supply growth is increasing by 0.05% per year.

By comparison, if the proof-of-work (POW) model were still running, the ETH supply would have increased by 3.580%, equivalent to about 1,039,506 digital tokens.

In other words, the total ETH supply with the proof-of-stake model (POS) has steadily decreased to lower inflationary levels.

In the case of ETH, following 2021’s EIP-1559 protocol, the Ethereum network has burned over $2.5 million ETH since December 12, 2022. In theory, Ether’s deflationary prospects should boost its overall scarcity, which can benefit ETH holders in the long term.