Ethereum’s Issuance Rate Drops to 0.014%, $8.78B in ETH Burned

• Ethereum has been operating under its proof-of-stake (PoS) consensus algorithm for over three months and has issued 4,790.45 ether or $5.7 million in value.
• Simulation metrics show that if Ethereum was still a proof-of-work (PoW) chain, its issuance rate or inflation rate per annum would be 3.58%.
• Since the Aug. 5, 2021 London Hard Fork, 2,795,773 ether or $8.78 billion in U.S. dollar value has been burned by destroying ETH.

Since Ethereum transitioned from a proof-of-work (PoW) blockchain to a proof-of-stake (PoS) network in September 2022, its issuance rate of new coins has dropped considerably. Statistics from ultrasound.money show that Ethereum’s current issuance rate of new coins per annum is 0.014%, which is far lower than the simulated PoW inflation rate of 3.58% per year. This means that if Ethereum was still a PoW chain, then 1,247,674.60 ether would’ve been added to the supply in the past 105 days instead of the 4,790.45 ether that has been minted since The Merge.

The addition of 4,790.45 ether has resulted in $5.7 million in value being added to the supply, while a PoW ETH chain would’ve added more than $1.5 billion in value. In addition to the lower issuance rate, Ethereum also has a burn mechanism, and records show roughly 658,000 ether is burned each year. To date, 2,795,773 ether or $8.78 billion in U.S. dollar value has been burned by destroying ETH since the Aug. 5, 2021 London Hard Fork.

Data from Dune Analytics indicates that the biggest leader in terms of the number of ETH burned is tied to the Uniswap decentralized exchange, which is responsible for burning more than 1.2 million ETH since the fork. The second-largest ETH burner is MakerDAO with more than 671,000 ETH burned, followed by Synthetix with approximately 545,000 ETH burned.

Not only does the burn mechanism reduce the amount of ETH in circulation and limit inflation, but it also helps increase the value of the remaining coins. As the number of validators on the Ethereum network continues to grow, the network’s inflation rate should continue to decrease as more ETH is burned and fewer coins are issued. As of Dec. 29, 2022, the number of Ethereum validators is set to surpass 500,000 in 2023, which should further reduce the overall issuance rate and keep the inflation rate in check.