- Although the EIP-1559 upgrade has been completed; over the past year, Ethereum’s total supply has increased by 620,000 ETH.
- Revenue generated from validator staking using proof-of-stake is more than that being burned, therefore adding to the total supply.
- Layer-2 solutions have forced transaction fees to be diverted to Ethereum’s base layer and have diluted deflationary effects.
Since the EIP-1559 change in Ethereum, which occurred in August 2021, the network has sent 4.5 million ETH to dead wallets with the most recent data available as of April 14, 2025. The point of this upgrade was to slow down the rate at which Ethereum’s supply increases and also make it deflationary, but that’s actually proven to be surprisingly untrue.
ETH burn chart. Source: Etherscan
Over the last year, Ethereum’s total supply has in fact increased to around 120.69 million ETH, according to Ycharts. This represents an annual growth rate of about 0.51% from April 2024.
While the idea of Ethereum turning into Ultrasound Money (i.e., becoming fewer and scarcer over time) keeps getting popular, this supply growth contradicts that.
ETH supply. Source: Ycharts
ETH’s Rising Supply is Fueled by Staking Rewards
The growth in Ethereum’s supply was largely due to ETH’s switch to proof-of-stake in September 2022. In this model, people stake their ETH in order to participate in keeping the network secure; in return, they are rewarded with new ETH.
25% of all ETH is currently staked by over 1 million individuals. In the span of a year, more than 624,000 to 1.25 million new ETH was earned by these validators, at a 2% to 4% annual return per validator.
In 2025 alone, Ethereum will release around 1.02 million new ETH, and only about 400,000 ETH will be burned. As a matter of fact, it’s actually less than the 465,657 ETH that was burned in 2024.
Although staking helps to secure the network, more ETH is being in supply than destroyed. Approximately 620,000 more ETH has been in circulation over the last year.
Ethereum Mainnet Fee Burns Decrease With Layer 2 Growth
A reason that ETH burns have decreased is due to reduced activity on Ethereum’s main network, where transactions occur. Part of the decline is due to the increasing use of Layer 2 networks like Optimism and Arbitrum, which operate faster and cheaper than the Ethereum base layer.
Once the Dencun upgrade was implemented more activities moved to these Layer 2s, thus leading to fewer transaction fees being burned on the main Ether network. To address ETH’s inflation issue, there have been proposals such as EIP-7514 that suggest limiting the exponential staking growth rate, but none have been enacted yet.
