Erik Weijers, 4 months ago

Ethereum is burning massively

Ethereum fans, at least those who believe in the concept of 'ultrasound money', are licking their lips. Recent data reveal that the net issuance of Ethereum has dropped to negative territory - again. What is the cause and why does it matter? 

Net ETH supply since the Merge

Before the Merge, Ethereum was proof-of-work and had to issue a constant and big stream of ETH to keep miners happy and profitable. The miners have left the stage since the Merge. ETH is still being issued but the rate has dropped with around 88%. It used to be 13.000 ETH per day and now is around 1.700 per day.

One effect of this is that the inflation rate of Ethereum has since the Merge in September of last year dropped sharply and hovered close to zero. To be precise, since the Merge until today, the inflation rate is -0.008% - effectively zero.

The net Ether supply since the Merge (blue line) compared to BTC and the old version of ETH had it still existed (ETH POW)

Burning depends on demand

How can inflation be subzero, since around 220,000 new ETH have been issued post Merge? It's because the burning mechanism, which caused 222,000 ETH to be burnt. Transaction fees to be included in blocks are paid in ETH, which is then burnt aka removed from circulation. (You can see these data on

This means that, the more popular Ethereum is, the more deflationary it will get. 

Why the drop in inflation?

In recent weeks, NFT trading volumes have been picking up after a period of lower activity. NFT marketplace OpenSea is the biggest Ethereum gas guzzler of them all. The result has been rising gas fees, and a higher burn rate. 

Why does this matter?

The drop in inflation rate has invigorated crypto users who like to see their money deflationary. Hence the term 'ultrasound': it's the Ethereum community's response to Bitcoin's credo of 'sound money'. Research has suggested that the price of deflationary tokens goes up more than non-deflationary tokens. And this effect is larger for coins with a long track record, than for new coins. Clearly, Ethereum has a reputation and is in demand. We will look out for signs of a negative correlation between the inflation rate and the price of ETH.

Featured articles
Four trading strategies for crypto
Bitcoin and Ethereum: what are the differences?
What determines the Bitcoin price?
Related articles
MEV-Burn proposal: ETH will get even more scarce

May 16, 2023

Ethereum developers have come up with a simply solution against the arms races that unfold because of mempool related trading. They will simply burn the ETH that these participants collect! The effect is that Ethereum will become even more scarce/deflationary and - hopefully - valuable.

Trade anytime, anywhere

Boost your trading impact and reaction time in over 80+ cryptocurrencies via instant access to your portfolio with the LiteBit app.

App Store
Google Play Store
  • 2525 Ventures B.V.
  • 3014 DA Rotterdam
  • The Netherlands
More info
  • About LiteBit
  • Support
  • Sell
  • News
  • Education
Subscribe for updates

Sign up to stay informed via our email updates

Explore popular coins
© 2023 LiteBit - All rights reserved