<\/p>\n
ETH\u2019s supply has increased by 3,051 coins since tagging a post-merge low on Dec. 30<\/p>\n
Ethereum started the year with inflationary supply growth after spending the majority of 2023 as a deflationary coin.<\/p>\n
Ether\u2019s supply has grown by\u00a03,051<\/a>\u00a0coins ($7.2M) since tagging a record post-merge low on Dec. 30 as on-chain activity dried up over the New Year holidays, according to data from Ultra Sound Money.<\/p>\n Ether\u2019s supply had steadily trended downwards throughout 2023 except for September and October, during which more than\u00a054,000 ETH<\/a>\u00a0were added to its supply. However, competition for block space quickly picked back up amid a flurry of memecoin trading amid the increasing popularity of Telegram\u00a0trading bots<\/a>, with 86,825.5 ($206.5M) coins removed from supply between the start of November and Dec. 30.<\/p>\n More than 337,333 ETH have been removed from supply since Ethereum\u2019s Shanghai upgrade, also known as\u00a0The Merge<\/a>, was activated in September 2022. The upgrade booted Proof of Work miners from the network, reducing the rate of new Ether issuance by roughly 90% and paving the way for Ethereum\u2019s burn mechanism to offset newly minted ETH in the form of staking rewards.<\/p>\n <\/p>\n For comparison, 4.94M ETH ($11.7B) worth of Ether would have entered supply under Proof of Work consensus.<\/p>\n Despite Ethereum largely making good on its deflationary promise so far, the increasing migration of users to Ethereum\u2019s Layer 2 ecosystem has resulted in mainnet fee volumes far dropping compared to before The Merge was activated. The trend has also been exacerbated by the extended NFT downtrend coupled with upgrades reducing the gas intensiveness of interacting with non-fungible tokens.<\/p>\n According to a Jan. 2 blog post from Evan Van Ness, an investor in Starbloom Ventures and author of\u00a0Week In Ethereum<\/em>, transaction fees were\u00a02.5 times<\/a>\u00a0higher prior to The Merge. <\/p>\n Van Ness estimated that 2,700 ETH has been burned on average each day since The Merge, compared to 6,500 on average from the introduction of Ethereum\u2019s\u00a0burn mechanism<\/a>\u00a0in August 2021 until the Shanghai upgrade was activated.<\/p>\n \u201cWith gas fees reverting to pre-merge levels, average daily burn will be approximately 8-10x higher,\u201d Van Ness said. However, the analyst\u00a0noted<\/a>\u00a0that the growing adoption of Layer 2 rollups \u201cmay keep gas fees from going crazy.<\/p>\n <\/p>\nGas fees fall post-merge<\/h2>\n