Summary
Since reaching a low point on December 30, Ethereum’s supply has increased by 3,051 coins, indicating inflationary supply growth. This comes after Ethereum spent most of 2023 as a deflationary coin. The supply of Ether had been steadily decreasing throughout the year, except for September and October when over 54,000 ETH were added. However, the supply reduction quickly picked up again in November and December due to increased competition for block space and memecoin trading. Since the activation of Ethereum’s Shanghai upgrade in September 2022, over 337,333 ETH have been removed from supply. The upgrade reduced new Ether issuance and introduced a burn mechanism to offset newly minted ETH. Despite the deflationary nature of Ethereum, mainnet fee volumes have dropped due to users migrating to Layer 2 solutions and the decline in NFT activity. Transaction fees were 2.5 times higher before the upgrade. However, the growing adoption of Layer 2 rollups may help keep gas fees from increasing too much.
Key Points
1. Ethereum’s supply has increased by 3,051 coins since reaching a post-merge low on December 30.
2. The supply of Ether had been steadily decreasing throughout most of 2023, except for September and October when more than 54,000 ETH were added.
3. The activation of Ethereum’s Shanghai upgrade, also known as The Merge, reduced the rate of new Ether issuance and resulted in the removal of over 337,333 ETH from supply.