Ethereum Supply Expansion Defies 'Ultrasound Money' Meme
The Ethereum network's supply has stopped shrinking since April 2024, contrary to the 'ultrasound money' meme that suggested the EIP-1559 mechanism would keep the burn rate above issuance. The transition to proof-of-stake in September 2022 reduced annual issuance by approximately 88 percent, from about 4.61 percent to roughly 0.52 percent. This change was driven by a reduction in miner rewards, as miners previously received 2 ETH per block plus rewards for orphaned blocks, totaling around 13,000 ETH per day.
The Pectra upgrade, which went live in May 2025, allows validators to hold up to 2,048 ETH, reducing operational complexity and enabling large stakers to consolidate their holdings into fewer nodes. This upgrade also reduces the initial slashing penalty by a factor of 128 and compounds consensus-layer rewards automatically into the validator balance.
The current supply expansion is driven by the massive difference between daily issuance and the daily burn. In 2026, the protocol issues approximately 2,600 new ETH to validators every day, while on quiet days, the network destroys only 50-70 ETH through the base fee burn. To offset this imbalance, high gas prices are required, with an average of 16 gwei needed to offset 1,700 ETH of daily issuance.