TechFlow reported, according to Blockworks, Ethereum is experiencing its longest inflationary period on record. Since mid-April, the circulating supply of ETH has increased for 72 consecutive days, adding nearly 50,000 ETH (approximately $168.7 million). While Ethereum holders typically benefit from net supply burns that increase scarcity, the current situation is reversed—Ethereum is becoming less scarce, with base fees at their lowest levels in the past two years.
Despite rising transaction volumes on the Ethereum mainnet and explosive growth in Layer-2 activity, base fees have dropped sharply by around 90% due to the Dencun upgrade, which introduced dedicated "blobs" transaction space per block for Layer-2 networks, significantly reducing fee competition. Currently, each block generates slightly over 2 ETH (around $6,800) in rewards, with transaction fees contributing less than 2.5%.
Since the September 2022 Merge, Ethereum has entered extended inflationary phases only a few times—the longest being a 40-day stretch shortly after a hard fork, followed by a 30-day period at the end of last year. Since the Merge, approximately 1.71 million ETH (about $5.8 billion) has been burned, while 1.36 million ETH (around $4.46 billion) has been issued, resulting in a net reduction of 346,000 ETH (approximately $1.17 billion), equating to an annual deflation rate of 0.161%. Had proof-of-work still been in use, the supply would have grown by 6.76 million ETH (about $22.87 billion), with an annual inflation rate exceeding 3%.
