Ethereum’s Supply: Are We Seeing Inflation Again at $2,700?
Since August 2021, Ethereum has implemented a fee structure that pushes in the opposite direction by burning a portion of every transaction fee, permanently removing those coins from circulation. However, the amount burned relies on network activity; during quieter periods, only 50 to 70 ETH might be destroyed.
When transaction fees are high, the burn can exceed issuance, as it did from the Merge until early 2024. With lower fees, new issuance outpaces the burn, leading to overall supply growth. Since April 2024, net growth has been about 0.2% to 0.8% annually, depending on the timeframe considered.
Cheaper Layer 2 Fees Cut Ethereum's Burn After Dencun
The recent Dencun...