How Ethereum became a deflationary asset – quick rundown with numbers

Ethereum doesn’t have a fixed “X% inflation forever” schedule. Its supply is basically the tug-of-war between:

1) ISSUANCE (new ETH paid to secure the network)

2) BURN (ETH destroyed via EIP-1559 base fee)

So ETH can be inflationary in one period and deflationary in another.

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THE 2 BIG CHANGES

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A) EIP-1559 (fee burn, live since Aug 2021)

– Base fee is burned (destroyed), so activity can reduce supply.

B) The Merge (executed Sep 15, 2022) — issuance collapsed

Ethereum.org’s issuance breakdown uses these ballpark numbers:

– Pre-Merge: ~13,000 ETH/day to PoW miners (+ PoS issuance existed in parallel)

– Post-Merge: ~1,700 ETH/day to PoS validators

=> ~88% drop in new issuance

A neat rule-of-thumb from ethereum.org:

– If average gas is ~16 gwei or higher on a given day, burn can roughly offset ~1,700 ETH/day issuance (net ~0 or deflation for that day).

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BEFORE vs AFTER: YoY SUPPLY INFLATION (REAL SUPPLY DATA)

Definition here: compare today’s circulating supply vs 1 year ago (YoY % change).

Here are the “regime” numbers around the Merge:

1) LAST FULL YEAR BEFORE THE MERGE (PoW era, but already with EIP-1559 burn)

– Sep 15, 2021 → Sep 14, 2022:

Avg YoY inflation: ~4.16%

Median: ~4.32%

2) FIRST POST-MERGE YEAR

– Sep 15, 2022 → Sep 14, 2023:

Avg YoY inflation: ~1.06%

Median: ~0.97%

3) SECOND POST-MERGE YEAR

– Sep 15, 2023 → Sep 14, 2024:

Avg YoY inflation: ~-0.13% (net deflation on average)

(Yes, negative YoY supply change on average for a full year.)

Peak “deflationary stretch” (from the dataset):

– Most deflationary datapoint: ~-0.2957% annualized (around mid-2023)

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RECENT SUPPLY DEVELOPMENT: “NEAR ABSOLUTE ZERO”

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Current snapshot (latest datapoint in my YoY series):

– Supply: ~120.74M ETH

– YoY inflation: ~0.2371% (as of 2026-01-26)

What does 0.237% mean in ETH terms?

– 0.2371% of ~120.74M ≈ ~286k ETH net added over a year (order of magnitude).

That’s tiny compared to the pre-Merge issuance regime.

Short-term trend (last ~30 days in the YoY series):

– YoY inflation drifted DOWN from ~0.2578% → ~0.2371%

So it’s mildly positive right now, but cooling, not accelerating.

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TL;DR

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– Pre-Merge: ~4%+ YoY supply growth was “normal”.

– Post-Merge: baseline issuance dropped massively, so burn often offsets a large chunk of it.

– Result: ETH supply has been hovering around ~0% (sometimes +, sometimes -), depending on activity.

Full write-up + charts + methodology:

How Ethereum became a deflationary asset – a guide to ETH’s inflation/deflation

Ethereum's inflation chart