Ethereum’s Surprising Inflation after the London Hard Fork
In a surprising turn of events, Ethereum’s network continues to experience inflation more than three years post the implementation of its London Hard Fork, which was intended to decrease supply growth. As of April 13, 2025, the total circulating supply of ETH has increased by 0.805% annually since the August 2021 upgrade, leading to an additional 3,477,830.85 ETH entering the market. This growth occurs despite the network’s burning of 4,581,986.52 ETH due to the EIP1559 fee-burning scheme aimed at counteracting the issuance of new tokens.
Comparison with Bitcoin
Comparatively, Bitcoin has seen a higher inflation rate of 1.517% over a similar timeframe, though its rigid supply limit starkly contrasts Ethereum’s uncapped model. The London Hard Fork, which was meant to help manage inflation by incentivizing ETH burns from transaction fees, has not succeeded in maintaining a consistent deflationary effect as intended. Additional upgrades, such as the Dencun release in 2024, have further reduced transaction fees, diminishing the overall burn rate and allowing the issuance of new ETH to surpass the amounts burned.
Current Supply and Burn Metrics
Currently, Ethereum’s supply stands at 120.69 million ETH, reflecting a 0.51% increase annually—an outcome contrary to hopes for ongoing deflationary trends based on insights from ultrasound.money metrics. Notably, the burning of ETH has primarily stemmed from transfers of ETH itself, which represent the most significant proportion at 374,298.59 ETH, while the NFT marketplace, Opensea, follows closely behind contributing 230,051.12 ETH predominantly through NFT-related activities. Uniswap V2 has also made a significant impact, burning 226,501.32 ETH through its operations, along with Tether (USDT) transactions on the Ethereum network resulting in the destruction of 208,769.94 ETH.
Other Contributors to the Burn Rate
Other contributors to the burn rate include various Uniswap implementations and Metamask’s Swap Router, which collectively account for substantial ETH burn as part of their transaction mechanisms. As recent market conditions show, Ethereum’s price has fallen 10.5% this week to around $1,601, reflecting broader trends within the cryptocurrency marketplace.
Future Outlook
While there have been sporadic deflationary moments during periods of high network utilization, sustainable scarcity of supply remains out of reach. Advocates for Ethereum believe that potential upgrades or increased demand could still lead to a transition into a deflationary status. However, current conditions illustrate the ongoing hurdles in achieving equilibrium between burns, new issuance, and network efficiency. The aspiration for Ethereum to be considered ‘Ultra Sound Money’ remains an ongoing endeavor.
