Ethereum's Deflationary Shift Post-Merge
Analysis of Ethereum’s financial data reveals a significant transformation in its economic model since the merge in September 2022. The network has burned 1,195,238 ETH (worth ~$2.65 billion), outpacing new issuance and reducing total supply by **309,663 ETH** (~$686.2 million). This deflationary trend contrasts Ethereum’s previous inflationary model, potentially enhancing ETH’s scarcity and long-term value.
👉 How does Ethereum's burn mechanism work?
Key Metrics
- Current ETH Supply: 120,211,380 ETH (lowest since merge)
- Market Cap: ~$266.39 billion
- Average Burn Rate: 1.83 ETH/min (PoS) vs. 3.09 ETH/min (post-EIP-1559)
- Hypothetical PoW Supply: 124,941,176 ETH (~$12B higher market cap)
Top Contributors to ETH Burn
Major decentralized applications (dApps) and services dominate Ethereum’s burn leaderboard:
| Burned ETH | Entity | Value (USD) |
|------------|-----------------------|---------------------|
| 84,006.46 | Uniswap Universal Router | $186,158,315.36 |
| 75,926.77 | Uniswap V2 | $168,253,722.32 |
| 74,739.31 | ETH transfers | $165,622,310.96 |
| 58,030.71 | Uniswap Universal Router 2 | $128,596,053.36 |
| 53,626.72 | Tether | $118,836,811.52 |
Top 10 Contracts: Burned ~$1.04B (nearly 50% of total post-merge burn).
Sector Diversity in ETH Burning
- DeFi: Uniswap (V2/V3/Universal Router) leads with ~$543.8M burned.
- Stablecoins: Tether’s presence reflects high stablecoin transaction volume.
- NFTs: OpenSea remains active despite bear market.
- Layer 2: Arbitrum and MetaMask highlight scaling adoption.
👉 Why is Ethereum's burn rate higher post-EIP-1559?
Implications of Ethereum’s Deflationary Model
- Investor Appeal: Scarcity may attract those seeking stores of value vs. inflationary fiat.
- Network Activity: Robust DeFi/NFT usage sustains high burn rates.
- Market Dynamics: Continued supply decline could elevate ETH prices if demand rises post-bear market.
Risks: SEC regulatory actions (e.g., classifying PoS tokens as securities) and macroeconomic volatility.
FAQs
Q: How much ETH has been burned since EIP-1559?
A: Over 1.19M ETH (~$2.65B) burned post-merge, with 3.09 ETH/min average rate since EIP-1559.
Q: Which dApp burns the most ETH?
A: Uniswap (all versions) tops the list, burning ~$543.8M across four contracts.
Q: Could Ethereum’s supply ever increase again?
A: Unlikely unless issuance surpasses burning—currently, burning outpaces new ETH creation.
Data sourced from Ultrasound Money.