ETH Enters Inflationary Phase as Emissions Outpace Burns

Leading blockchain network Ethereum transitioned from a deflationary to an inflationary state amid a lower burn-to-mint ratio in the first half of 2024. 

CoinGecko, an independent crypto data aggregator, recently revealed that Ethereum emitted 540,958 ETH while only 465,657 ETH were burned from the beginning of 2024 up to now. This shift marks a significant reversal in Ethereum’s token economics, netting a total increase of 75,301 ETH in its circulating supply.

Ethereum Flips to Inflationary Trend

CoinGecko observed that Ethereum exhibited deflationary characteristics between the fourth quarter of 2022 and the first quarter of 2024. 

Notably, Ethereum’s emissions totaled 220,454 ETH, though this was followed by a higher burn rate of 333,555 ETH, effectively reducing the overall supply by 113,100 ETH. However, this trend reversed in the second quarter as the network saw decreased activity, pushing Ethereum into an inflationary phase.

According to CoinGecko, throughout the second quarter of 2024, the Ethereum network emitted 228,543 ETH while burning only 107,725 ETH, which resulted in an increase of 120,818 ETH in circulation. Notably, July 2024 experienced the lowest monthly burn rate on record for the year, with just 17,114 ETH burned, marking a significant 35.0% decline from June’s figures.

Notably, since the enactment of EIP-1559 in June 2021, which established a system for burning part of the transaction fees, Ethereum has burned over 400,000 ETH. To date, the cumulative total of ETH burned has reached 4.36 million.

Uniswap Burned 71,915 ETH 

Uniswap leads the charge in ETH burning, eradicating 71,915 ETH from the market in 2024, including 2,470 ETH in July alone. Behind Uniswap, ETH transfers and Tether (USDT) transactions are major players in the burn mechanism. 

To date, ETH transfers have led to 33,538 ETH being burned, while Tether’s activities have removed 23,332 ETH from circulation this year. Other platforms also participate in burning ETH, though to a lesser degree.

Ethereum Supply Grows as Spot ETF Attracts Fresh Inflows

Ethereum’s shift to an inflationary state coincides with its recent surge in investor interest, as evidenced by a $4.9 million net inflow into the Ethereum spot ETF. This influx marked the first in four trading days, coinciding with Ethereum’s 3% price gain, outperforming major assets like Bitcoin and Solana. 

The growing supply, driven by emissions outpacing burns, and the renewed investor confidence highlighted by the ETF inflow reflect the complex dynamics at play within Ethereum’s ecosystem as it navigates both inflationary pressures and market optimism.

As of press time, ETH traded at $2,718.94, indicating a 2.7% price increase in the past 24 hours.