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Over the past 30 days alone, Ethereum’s token supply has increased by nearly 30,000 ETH, equivalent to over $47 million at current prices, according to data from ultrasound.money. This increase in ETH token supply is partly driven by lower network usage and fees stemming from the adoption of layer 2 (L2) scaling solutions.
According to data from L2 analytics L2Beats, scaling solutions have gained significant user adoption and Total Value Locked (TVL). Currently, the TVL of L2 networks amounts to roughly $10.5 billion, more than double that of a year ago.
In comparison, Ethereum’s TVL dropped more than 30% over the past year from nearly $30 billion to more than $20 billion, according to DefiLlama data.
Ether’s deflationary narrative first emerged after the activation of EIP-1559 in August 2021, which introduced a fee-burning mechanism that burns a portion of ETH paid in fees by users. This acted as a deflationary force on ETH’s circulating supply.
EIP-1559, combined with The Merge’s transition to proof-of-stake (PoS) consensus cut issuance by nearly 90%, significantly reducing Ethereum’s inflation rate. Before The Merge, miners received approximately 13,000 ETH per day as block rewards. Since transitioning to PoS, only a
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Author: Diego Almada Lopez
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