The worrying trends in the Ethereum Ecosystem (ETH) have been deepening since the beginning of February last year. ETH broadcasts are constantly beyond burning, proving the lack of network use and marking the beginning of an inflationary period.
The main reason behind this inflationary behavior is the lack of use of Ethereum Network, as ETH burning directly depends on activity on the network. If there are many transactions, the burning base fee increases..
That negative trend, which was integrated from the end of January and reported by encryption, is directly related to the combustion system introduced by the proposal to improve Ethereum 1559 (EIP-1559). Manage native token supply.
Since April 2024, activity at Ethereum has been declining constantly to this day, with ETH burning down, according to the Ultrasound Money site. Meanwhile, the issue of a new ETH for validators will continue at a constant pace as they receive it. Rewards regardless of network usage level. This created an imbalance that led to a net increase in supply.
Second Layer Network stole the standout of the main layers of Ethereum
Lack of use may be related to several factors. On the one hand, the rise (L2) of the second layer solution (L2) that processes transactions outside the main Ethereum chain and then records them in lots reduced the amount of direct transactions in the base layer by recording transactions in lots.
These solutions improve scalability and reduce user costs, but also reduce ETH burning. Fewer transactions in the main layer They have a lower base fee for burns.
According to OnChain, the number of transactions (blue line in the next graph) and arbitrum (green line) have consistently surpassed those recorded on the main Ethereum chain (gray line) since April 2024, according to the growth of PIE analytics sites.
Meanwhile, competition with other distributed finance (DEFI)-linked networks such as Solana (SOL) and BNB chains (BNB) may be deviating Ethereum activity.
Broadcasts exceeded the number of burns since April 2024.
Around 2 million ETHs have been burned from the September 2022 merge to April 2025, but over 2,142,000 ETHs have been issued to reward the verification team.
That same source reveals that during that period, the broadcast exceeds the burning of around 180,000 ETH. Equivalent to a net increase in supply of 0.858% per year At the time of this article from the implementation of EIP-1559.
However, the increase in ETH supply over the burning of that token began to be more pronounced in April 2024, when broadcasts began to continually overcome burning.
Impact on the Ethereum ecosystem
The impact of this period of inflation is not trivial. Without corresponding increase in demand, the increase in ETH supply is Push that value in the market.
For users and developers who rely on Ethereum, this could lead to less confidence in the ether as active. Furthermore, validators that continue to receive new ETH emissions can benefit in the short term, but their value decreases It also affects long-term income.
Inflation, on the other hand, can encourage developers to look for ways to increase the activity of key Ethereum layers through improved protocols that directly carry out more attractive transactions on the network. For example, an immediate update, such as Sirty, could lead to improved scalability or efficiency of L1, which could drive adoption.
In conclusion, the lack of Ethereum use led to a period of inflation that began consolidation in April 2024 and has been strengthened from February 2025 to the present.
(tagstotranslate) blockchain
