Ethereum (ETH) Achieves Deflationary State, Burns All Coins Created Since The Merge

In the wake of The Merge, Ethereum (ETH) has successfully burned all newly minted ETH since the upgrade.

As of the morning of November 9th, Ethereum's network has first achieved a deflationary state since The Merge, according to data from Ultrasound.money. Specifically, the circulating supply of Ethereum as of this morning is 120,521,000 ETH, matching the level on September 15th, the day of The Merge.

As previously reported by Coin68, The Merge was the most significant upgrade in Ethereum's history to date. It transitioned the world's second-largest cryptocurrency from a Proof-of-Work to a Proof-of-Stake consensus mechanism. This shift eliminated the need for miners, reducing energy consumption by up to 99% and cutting block rewards for miners.

Without The Merge, Ethereum would have experienced an annual inflation rate of around 3.6%, adding approximately 649,000 new ETH to the circulating supply from mid-September to now.

With the reduction in new ETH issuance and the EIP-1559 mechanism burning ETH from transaction fees, Ethereum has now entered a deflationary phase, which occurred today.

In the past 30 days, Ethereum has burned nearly 61,000 ETH, primarily from DeFi applications like Uniswap, MetaMask, and 1inch, as well as stablecoins USDT and USDC, and NFT platforms like OpenSea.

Since the implementation of EIP-1559 in August 2021, over 2.7 million ETH have been burned, highlighting the significant impact of this mechanism on Ethereum.

Looking ahead, Ethereum will focus on testing the Shanghai upgrade to unlock more than 14 million ETH locked in The Merge staking contracts, as well as continue to advance the new development roadmap announced by Vitalik Buterin.

ETH's price has shown little reaction to the news, as it is still stabilizing after a dramatic dump early on November 9th.