Ethereum Has Added 1 Million ETH Since the Merge, and the Burn Rate Cannot Keep Up

The "ultrasound money" narrative had a simple premise: after Ethereum's Merge to proof-of-stake in September 2022, EIP-1559 base fee burns would outpace validator issuance, making ETH deflationary over time. For about 18 months, it worked. Then it stopped.

Data from ultrasound.money shows Ethereum's circulating supply has now increased by more than 1 million ETH since the Merge, pushing the total above 121 million, as reported by Wu Blockchain on March 15, 2026. ETH trades at $2,099 as of March 15, 2026, down 0.3% over 24 hours, with a Fear and Greed index sitting at 32 (Fear).

The Dencun Inflection Point

The deflationary period was real but short-lived. Between the Merge (September 2022) and the Dencun upgrade (March 2024), Ethereum burned more ETH than it issued. Net supply briefly dropped below 120 million. EIP-1559's mechanism worked exactly as designed: high on-chain demand drove base fees up, and those fees were destroyed.

Dencun changed the equation. The upgrade introduced EIP-4844, which created "blob" transactions for Layer 2 rollups. Rollups like Arbitrum, Optimism, and Base shifted their data posting from expensive calldata to cheap blob space. The result was a dramatic reduction in fees paid to Ethereum's base layer.

Before Dencun, Layer 2s were among the largest contributors to ETH burns. After Dencun, their fee contribution dropped by roughly 90%. The burn rate collapsed, but validator issuance (approximately 2,600 ETH per day) continued unchanged. The gap between issuance and burns widened, and supply started climbing.

Why Burns Cannot Recover at Current Activity Levels

Ethereum's burn mechanism is demand-driven. When blocks are full and users compete for space, base fees rise and more ETH gets destroyed. When blocks have spare capacity, base fees drop to near-zero minimums.

Two factors are keeping burns low. First, blob space is still underutilized. Layer 2s have cheap posting costs and little reason to compete for blob slots, which means minimal fee pressure on that transaction type. Second, on-chain activity on Ethereum mainnet has not returned to 2021-2022 levels. DeFi volume, NFT trading, and speculative token activity are all well below their peaks.

The daily burn rate needs to exceed roughly 2,600 ETH to make the network deflationary. Recent burn rates have averaged between 500 and 1,500 ETH per day, depending on activity spikes. Without a sustained increase in mainnet demand or a repricing of blob fees, the supply will keep growing.

The 121 Million Number in Context

To put 1 million ETH of new supply in perspective: at current prices, that represents approximately $2.1 billion in additional ETH entering circulation since the Merge. Pre-Merge Ethereum under proof-of-work was issuing roughly 13,000 ETH per day. Under proof-of-stake, gross issuance dropped to around 2,600 ETH per day, a reduction of about 80%.

The supply increase is not a sign that the Merge failed. It reduced issuance by the promised amount. The issue is that the burn side of the equation weakened. The network became more efficient at processing L2 data (a technical success) at the cost of lower fee revenue (an economic trade-off).

Ethereum's supply of 121 million is still below its projected trajectory under proof-of-work, which would have put it above 125 million by now. The Merge did slow supply growth. It just did not eliminate it.

What Would Flip the Trend

Three conditions could push Ethereum back toward deflation. A sustained surge in mainnet activity, whether from DeFi, gaming, or a new category of on-chain applications, would increase base fees and burns. An adjustment to blob pricing through a future protocol upgrade (some researchers have proposed dynamic blob fee floors) could increase L2 costs and restore some burn pressure. Or a combination of both: more demand plus tighter supply of block space.

None of these are guaranteed. Ethereum's roadmap prioritizes scaling and cheap L2 access, which structurally reduces fee pressure on the base layer. The network may be moving toward a model where ETH is mildly inflationary during quiet periods and deflationary only during demand spikes. That is a different pitch than "ultrasound money," but it may be the realistic one.

For crypto card users holding ETH as a spending balance, the supply dynamics have a practical implication. Mild inflation means ETH's purchasing power erodes slightly over time if demand does not keep pace. Users who stake their ETH through validators or liquid staking protocols can offset this dilution, currently earning roughly 3-4% APY. Those who hold unstaked ETH on a custodial card absorb the full inflationary impact without compensation.

Overview

Ethereum's circulating supply has crossed 121 million ETH, adding more than 1 million ETH since the September 2022 Merge. The Dencun upgrade's blob transactions reduced Layer 2 fee contributions to the burn mechanism by roughly 90%, and mainnet activity has not been strong enough to compensate. Daily issuance of approximately 2,600 ETH consistently outpaces daily burns of 500-1,500 ETH. Ethereum is still issuing far less than it would under proof-of-work, but the deflationary thesis requires demand-driven burn rates that current market conditions do not support.