Ether turns inflationary for the first time since Merge

The Ether (ETH) supply has ceased to be deflationary following Ethereum’s highly anticipated Dencun upgrade that went live two months ago.

Total Ether supply increased to 120.1 million on May 7, from 120 million on March 12, before the Dencun upgrade was rolled out on mainnet, according to CryptoQuant data.

While this is a small increase, it marks the first period when Ether supply turned inflationary since September 2022, when the much-anticipated Merge transitioned Ethereum to its current proof-of-stake consensus model.

Ethereum: Total Supply and Fees Burned. Source: CryptoQuant

Ether temporarily losing its deflationary status is not critical for the Ethereum network since its main benefits are more related to decentralized applications (DApps), according the founder and CEO of Cryptoquant. In a May 9 X post, Ki Young Ju wrote:

“Post-Dencun upgrade, $ETH lost deflationary status with reduced fees, departing from “ultrasound money.” Ethereum’s strength lies in DApps; it’s wiser not to compare it to Bitcoin’s sound money narrative.”

Ethereum Total Transactions and Fees Burned. Source: Ki Young Ju

Ether supply first turned deflationary after the Merge on Sept. 15, 2022, when a mechanism that permanently burned transaction fees on the network was introduced resulting in a decreasing Ether supply.

Over 419,713 Ether tokens were burned, or permanently removed from circulation, since the Merge, according to


Related: Dencun is a big step towards mass adoption: Metis CEO

The death of “ultra sound” money?

The Dencun upgrade has ended Ether’s inflationary streak by making median transaction fees as much as four times cheaper than before, with the same level of network activity.

While this is a significant step for the Ethereum network and its users, it could spell the end of Ether’s status as ultra-sound money, according to a May 8 report by CryptoQuant.

“The Dencun upgrade has made ETH inflationary again, potentially killing the narrative of “Ultra sound” money as a structurally lower amount of transaction fees burned on Ethereum have had the corresponding effect of not decreasing the total supply of ETH to keep it deflationary.”

Due to lower transaction fees, the amount of Ether being burned has declined to its lowest levels since the Merge, while supply growth has risen to its highest level since the upgrade.

Related: VanEck subsidiary’s memecoin index up 137% year-to-date


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