Ethereum's Burn Rate Collapse: Ultrasound Money Thesis Under Pressure

The Ethereum network has undergone significant changes since the introduction of EIP-1559 in August 2021. This upgrade included a base fee burn mechanism, which permanently removes a portion of every transaction fee from total circulation.

Approximately 4.6 million ETH has been burned since EIP-1559 launched, but total supply has grown slightly to roughly 120.7 to 121.5 million tokens overall.

The daily burn rate collapsed from thousands of ETH per day to roughly 50 to 70 ETH per day in Q1 2025 due to the March 2024 Dencun upgrade, which moved Layer 2 data to cheaper blob transactions and reduced mainnet fee competition.

This change created an unintended consequence: far less ETH was being burned per unit of economic activity on the network. As a result, net issuance turned positive, and ETH supply crossed back above its Merge era level.