Despite Ethereum Merge, ETH Supply Continues to Increase!

Ethereum waiting for months Merge The update took place on September 15, 2022. With the Merge update, the Ethereum network has moved from a Proof-of-Work (PoW) system to a Proof-of-Stake (PoS) system.

With the transition to PoS, Ethereum mining with graphics cards is a thing of the past. ETH miners were replaced by shareholders who had enough Ethereum and locked it in the system.

In the PoW network, miners were providing the continuity of the network with their graphics cards. For this, they were rewarded with new ETH tokens produced on the network. With the Merge update, this situation came to an end. Thus, it was expected that the total supply of Ethereum, whose supply is unlimited, will gradually decrease. However, this has not happened yet, despite the update.

Why Is ETH Supply Still Increasing?

Despite the Merge update, the overall supply continues to increase as activity on the ETH network is declining. The main reason for this is that the reward for the shareholders is more than the network transaction fee amount.

Known DeFi Korpi, one of its analysts, published a table on this situation on his Twitter account.

INFLATIONARY / DEFLATIONARY… BUT HOW MUCH?

Inflationary / deflationary are meaningless terms without figures.

The below table shows the annual $ETH supply growth for different levels of staked ETH and Average Base Fee.

Green cells represent ultra sound scenarios. pic.twitter.com/ZBO10HNf5Z

— korpi (@korpi87) September 15, 2022

According to the table shared by Korpi on his Twitter account, the transaction fee on the network must be 15 gwei for Ethereum to take on a deflationary structure. It is also important that the ETH tokens staked on the PoS system do not exceed 14 million.

Since the Ethereum Merge update took place, 3,000 new ETH tokens net have been generated on the network.

$ETH finds buyers at $ 1327 as of writing.