Since the completion of the merge, i.e. the transition to a proof-of-stake (PoS) consensus mechanism, the circulating supply of Ethereum (ETH) has increased by over 1 million units.
According to the data of the analysis platform ultrasound.moneythe total supply is Currently reaching nearly 121.53 million ETHwhich corresponds to an annualized inflation rate of approximately 0.24%.
This change in supply dynamics marks a departure from the “supersonic money” narrative, a concept that defined Ethereum as a deflationary asset. The mechanism to achieve a net reduction in supply is based on burning a portion of transaction fees (EIP-1559). In order for assets to become deflated, Network needs to spend more ETH than it drains to get rewards To the validator.
Although Merge significantly reduced the daily issuance compared to Proof-of-Work (PoW) mining, the amount of ETH destroyed steadily decreased. Since February 2025 after the Pectra upgrade in December 2024, Ethereum has no longer been in a consistent deflationary state. This trend intensified after the Pectra upgrade, reinforcing the inflation path due to structural changes in data management and network charges.
The increase in supply is due to Directly related to implementing Layer 2 (L2) scalability solutions. Processing most transactions outside of the Ethereum mainnet reduced congestion at the base layer. As a result, gas fees will be kept at minimal levels, the amount of ETH burned each day will be reduced, and issuance to validators will outpace coin destruction.
Simulation: What would have happened without the merge?
Despite the issuance of this additional 1 million ETH, current data shows that the consensus shift is suppressing a significant expansion of the money supply. According to the simulation of ultrasound.moneyif Ethereum continued to operate with a traditional mining system (PoW), Approximately 14 million additional ETH will be issued At this same time. This means that even though the network is currently technically inflationary, its issuance rate is significantly lower than in previous stages.
