Ethereum's Supply Shift: Network Becomes Inflationary Again
Ethereum's supply dynamics have changed, making the network inflationary again. According to recent data, the Ethereum network produces more coins than it burns, resulting in a net increase in supply. This change is attributed to the decreased burn rate, which is caused by the shift of transactions to layer 2 networks, such as Dencun, and the subsequent reduction in transaction fees. As a result, the network is issuing approximately 2,600 new coins daily, while the burn rate is consistently lower, leading to an overall increase in supply.
The change in supply dynamics is significant because many investors were attracted to Ethereum with the expectation of a dwindling supply. However, the recent data suggests that this narrative is no longer accurate. The increased supply growth, at around 0.2% to 0.8% annually, is unlikely to drive the price of Ethereum, which is influenced more by demand and investor sentiment.
The Ethereum community is discussing the implications of this change, with some questioning whether the network is inflationary for the long term. The Fusaka upgrade, introduced in December 2025, aimed to address the issue by imposing a minimum price for data layer 2s can post. However, the supply has continued to rise, suggesting that the adjustments have not been enough to restore previous burn levels.