Ethereum is becoming inflationary again.
According to data from Ultrasound.money and Glassnode, the rate of ETH burning has significantly decreased, while supply growth is back in positive territory.
📉 What is happening?
Since the activation of EIP-1559, Ethereum implemented a fee-burning mechanism, making ETH potentially deflationary. But that only holds if activity on the main network (L1) is intense. And today… it is not.
Why?
Because layer 2 networks (L2) like Arbitrum, Optimism, Base, and zkSync are processing most of the transactions, reducing the pressure on L1... and thus, decreasing the burning of ETH.
📊 Key figures:
🔥 Current burn rate: well below the post-merge peak.
🪙 Net supply: slowly increasing again (~0.14% annualized).
🧠 L2 transactions: consistently surpassing L1 since early 2024.
🧠 What does this mean?
ETH is losing its deflationary aura in the short term, which could dampen some of the speculative enthusiasm.
L2s are gaining operational dominance, confirming the modular scalability of the ecosystem, but also fragmenting the economic pressure on the main network.
“Decentralization without economic activity is aesthetic, not functional.” — Eric Wall, crypto analyst.
