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The Ethereum (ETH) supply has been on a steady rise since mid-April, following the Dencun upgrade, which has reduced competition for block space on the mainnet. This marks the longest period of supply inflation since the Merge in 2022.
According to data from ultrasound.money, the supply of new Ether has been inflating consistently, with over 112,000 ETH added since April 14. The primary driver of this inflationary trend appears to be the Dencun upgrade, implemented on March 13.
The Dencun upgrade introduced nine Ethereum Improvement Proposals (EIPs), notably EIP-4844. This proposal introduced “blobs,” a mechanism for temporarily and separately storing transaction data, which reduces fees for block data on Ethereum layer-2 networks. Additionally, the upgrade brought proto-danksharding, enhancing data availability for block space on the Ethereum mainnet.
These changes have significantly lowered the cost of transactions on Ethereum layer-2 networks such as Arbitrum and Optimism. However, the total amount of ETH burned on the mainnet has dropped significantly.
Despite the recent inflation, the overall supply of ETH has decreased since the Merge. Since September 2022, more than 1.5 billion ETH has been burned, while 1.36 billion ETH has been added, resulting in a net supply reduction of 345,000 ETH. This equates to over $1.1 billion at current prices since Ethereum transitioned to a proof-of-stake consensus mechanism.