News - Why ETH is no longer deflationary

By Mike Hesp

Why ETH is no longer deflationary

Ethereum (ETH)

A lot has happened to Ethereum since "The Merge. What is the current state of the network?

One of the strongest stories around Ethereum is the idea of "Ultrasonic Money," or the deflationary supply dynamics since the EIP-1559 update.

The function is simple: the more activity there is on the mainchain, the more ETH is "burned," meaning it is removed from circulation in the long run. This shrinks the overall supply.

Since about mid-August, however, this inflation rate has been positive again, which speaks to the waning activity on Ethereum and the overall situation during the summer slump.

But anyone feeling insecure because of this should take a look at the following chart. The chart provides insight into ETH's inflation rate over time

Inflation rate of ETH over time

Bron: Glass node

Since February, Ethereum's net supply has been consistently negative, even after the marginal inflation of recent weeks. Even a brief lull does not seem to have changed this.

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