Previously, ETH was 'fuel' for smart contracts — a consumable asset without a strict monetary model.

The issuance was constant, with new ETH entering the network with each block.

Everything has changed in the last three years: step by step, Ethereum has transitioned from an inflationary token to a potential deflationary asset.

🟠What has changed:

1. EIP-1559 (August 2021)

Instead of paying fees directly to miners, the network began to burn the base fee.

This became the first mechanism to reduce the overall supply of ETH.

The result — during periods of high activity, more ETH was burned than produced, especially during the era of DeFi, NFTs, and meme coins.

2. The Merge (September 2022) transitioned to Proof-of-Stake.

The issuance sharply decreased:

— before The Merge — ~13,000 ETH per day

— after — ~1,600 ETH per day

This is equivalent to a ~90% reduction in inflation, without exaggeration. In other words — if Ethereum had remained on PoW, today there would be millions more ETH in circulation.

3. Pectra Update (May 2025)

The next step is to expand capacity through increased data and blobs (useful for L2).

This increases the volumes of fees and, accordingly, the volumes of burned ETH, especially at peak moments.

Previously, when GWEI fell below 30-40, ETH became inflationary.

Today, ETH is deflationary even at the current GWEI.

🟠What does this give?

Ethereum stops being just 'gas' for contracts. It becomes:

— An asset with predictable monetary policy

— Protected from uncontrolled inflation— Basic collateral for the DeFi and L2 ecosystem

— A contender for the role of store of value in Web3

🟠Why is this important:

The market begins to perceive ETH not just as a technological platform, but also as a financial asset.

Not just a means of payment — but a value that can be held on the balance.

This is why we see a growing interest in ETH — both institutional and retail.

P.S. ETH delegated retail products to its children L2, while it moved towards store of value (that is, towards Bitcoin with its infrastructure).

With such positioning, ETH could be worth not 5-10k, but quite 20-30k.