Ethereum’s Supply Is Growing Again After The Merge

A lot has changed in Ethereum since The Merge.

One of the more interesting shifts is that the ETH supply has started to grow again. Since the transition to Proof-of-Stake, more than 1 million ETH has been added to circulation, pushing the total supply above 121.5 million ETH. At the moment, Ethereum’s annual inflation rate sits around 0.24%, which is still relatively low compared to many other networks.

So what changed?

After The Merge, Ethereum supply was actually decreasing for a period of time thanks to the burn mechanism introduced in EIP-1559. A portion of every transaction fee (the base fee) is permanently removed from circulation, which helped offset newly issued ETH.

However, a major turning point came after the Dencun upgrade in March 2024. The update reduced fees for L2s by around 90%. While that’s great for scalability, it also means the base fee tends to be lower, and since only the base fee is burned, less ETH gets removed from supply.

At the same time, staking participation keeps growing. Around 38 million ETH is now locked in staking. Currently, the network issues roughly 2,800 ETH per day to validators, while about 2,300 ETH is burned daily. That means issuance slightly exceeds the burn rate.

In other words, three main forces are shaping Ethereum’s supply today: cheaper transactions, rapid Layer-2 growth, and increasing staking participation.

Over the past year, about 940,000 ETH was added to supply. That may sound like a lot, but relative to total supply, it’s less than 1%.

Meanwhile, Ethereum gains stronger network security, deeper staking participation, and improved scalability, which many would argue are the real long-term priorities.

Full post: https://x.com/everstake_pool/status/2033560628661567633