Ether Not Quite ‘Ultrasound’ Money As Inflation Persists

ETH Issuance Has Dropped By 97%

Ether Not Quite ‘Ultrasound’ Money As Inflation Persists

Proponents hoping to immediately proclaim Ether to be an “ultra sound” form of money can’t celebrate just yet.

That’s because the ETH supply has actually increased by roughly 651 tokens since the Merge, with the data coming courtesy of


ETH Supply Change Since The Merge

The Merge, which completed Ethereum’s transition from proof-of-work consensus to proof-of-stake on Sep. 16, reduces the protocol’s issuance of ETH by roughly 90% by eliminating block rewards to miners.

The Merge Goes Live in Historic Upgrade for Ethereum

The Merge Goes Live in Historic Upgrade for Ethereum

After Years of Toil and Tests Ethereum Shifts to Proof of Stake and Sets Stage for Further Changes

The Defiant The Defiant

Base Fee Burn

Combined with EIP-1559, an Ethereum upgrade which resulted in burning a portion of transaction fees, ETH gained the potential to become a deflationary asset. This is because the burned fees can outweigh the ETH issued to validators, given enough demand for block space.

This deflationary potential, along with the implied increase in price given stable demand, led to the narrative of ETH becoming “ultrasound” money.


Low Network Activity

So far though, this hasn’t been the case as low demand to transact on Ethereum has persisted. Low demand means smaller amounts of ETH burned and this has kept ETH slightly inflationary since the Merge.

This doesn’t necessarily mean that ETH can’t become a deflationary asset if demand picks up, and it should be noted that issuance under proof-of-stake would have been over 22,000 ETH over the same period, using’s simulation tool.


ETH Issuance Simulation Under PoW

Lucas Outumuro, head of research at Into the Block, a crypto analytics and research firm, predicted in July that ETH would become deflationary based on data from the first half of the year. He recently updated his thesis in to acknowledge the inflation ETH is currently experiencing.

Overall, Outumuro believes that the focus on whether ETH has become deflationary or not is misplaced. “Too much emphasis is put on supply in crypto,” he told The Defiant, adding that the difference between a slightly inflationary or deflationary issuance for ETH is negligible.

“The path forward for ETH is likely to be driven mostly by demand for network usage and unfortunately it remains in a steep downtrend in the depths of the bear market,” the head of research said.

Ether is down 1.6% in the past 24 hours.

Terminal Chart

ETH Price

ETH Price, Source: The Defiant Terminal