Ethereum Supply Jumps Ahead of Pectra Upgrade, Here’s Why

banner-image

Ethereum’s total token supply has increased to levels not seen before the Merge upgrade in 2022. The Ethereum tracking website, ultrasound.money, reported that the total supply of Ether (ETH) currently is 120,521,523 ETH, an increase of 383 ETH since the Merge. It is worth noting that analysts say that this increase in supply is due to the Dencun upgrade, which happened in 2023.

Ethereum System Changes Steadily

The Merge marked an essential change for Ethereum from a Proof of Work (PoW) system to a more energy-efficient Proof of Stake (PoS) system. One main goal of the Merge was to lower Ethereum’s inflation rate. 

It introduced a deflationary mechanism with EIP-1559, which burns part of the transaction fees. This move reduced the overall increase in ETH supply, representing a significant change for the network’s long-term economics.

However, the Dencun upgrade changed the trend. This update made several changes to Ethereum’s system, including new features that may have unintentionally caused an increase in ETH issuance.  Meanwhile, this situation raises questions about how Ethereum’s deflationary methods balance the risk of inflation if future upgrades continue producing more ETH.

The Process of Burning Ether

Ether burning refers to the act of eliminating or withdrawing Ethereum from circulation. This can be accomplished in several ways, including sending Ethereum to an invalid address, bright contract burns, and proof of burn. 

Interestingly, burning Ether can have various benefits for the network, including lowering inflation and boosting scarcity. However, there are also negative implications, such as decreased network liquidity.

Recall that in 2023, Ethereum volume in circulation was reduced by 100,000 coins after the merge. 

As reported by TheCoinRise, Ethereum’s coin supply has been reduced by 0.146% per year since the Merge. If the Merge had not occurred, the amount of Ether in circulation would have increased to over 2.52 million coins, or $4.9 billion.

Ethereum Positioned as a Universal Tool

Ethereum co-founder Vitalik Buterin highlighted Ethereum’s founding philosophy. At first, he compared the Ethereum address to the principle of “text as a universal interface.” By this analogy, he positioned the ETH address as a universal tool for authorization across the blockchain ecosystem. Then, he called it the philosophy behind the main alternative blockchain.

Furthermore, Buterin proposed a few solutions via some dedicated enhancements that could improve Ethereum’s future potential. So far, he has discussed The Merge, The Scourge, The Surge, The Verge, and the Purge. Meanwhile, Buterin acknowledged that the network is working on alternatives, including grants that allow recipients to stake ETH independently.

Recall that the visionary co-founder revealed a comprehensive strategy to fortify Ethereum’s defense against threats posed by quantum computers. Also, he outlined a potential recovery plan in a quantum emergency.

February 18, 2025

Geoffrey Kendrick of Standard Chartered, predicts that more sovereign wealth funds..

February 18, 2025

Dogecoin (DOGE) and Shiba Inu (SHIB) have been long-time favorites in..

February 18, 2025

Over the past few weeks, murmurs of a Shiba Inu (SHIB)..

features-presales-thunder

Floppypepe ($FPPE) is your ticket to the moon. Escape the ordinary and reach for lunar gains with this AI meme token. Secure your spot now before it's too late.

Join Now