Ethereum Supply Contraction: Blob Fees and Pectra Upgrade Drive Burn Rate

The Ethereum network has experienced a significant supply contraction due to increased demand for blob fees and the Pectra upgrade.

The 30-day net supply of ETH hit a negative 18,000 tokens following these changes, driven by the EIP-1559 burn mechanism that removes ETH from circulation when transaction fees occur.

Layer 2 activity has moved away from the mainnet, but rollups still purchase blobs to post transaction data on the blockchain, driving the burn rate and creating a supply squeeze.

The 'ultrasound money' narrative faces pressure as gas prices remain low due to Layer 2 migration, contradicting the inflationary trend seen throughout 2025 when the supply grew by 0.23% annually.