Since mid-April, the supply of Ether (ETH) has been on a steady rise, marking the longest inflationary period since the Merge in 2022. This trend began following the Dencun upgrade in March, which appears to be a significant factor in the increased supply.
The Dencun upgrade, implemented on March 13, introduced nine Ethereum Improvement Proposals (EIPs), notably EIP-4844. This proposal introduced “blobs,” a mechanism that temporarily stores transaction data separately, thereby reducing fees for block data on Ethereum layer-2 networks. The upgrade also included proto-danksharding, which improved data availability for block space on the Ethereum mainnet.
Since April 14, over 112,000 ETH have been added to the overall supply, according to the Ethereum data dashboard ultrasound.money. The reduction in transaction costs on layer-2 networks like Arbitrum and Optimism has led to a significant decrease in the amount of ETH burned on the mainnet, contributing to the inflationary trend.
Despite recent inflation, the total supply of ETH has decreased since the Merge. More than 1.5 billion ETH have been burned since September 2022, while 1.36 billion ETH have been added. This results in a net supply reduction of 345,000 ETH, valued at over $1.1 billion at current prices since Ethereum transitioned to a proof-of-stake consensus mechanism.
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