Ethereum supply turns deflationary again as gas burn accelerates
Higher base fees from sustained L2 activity tipped 30-day net issuance negative for the first time since the summer.
Ethereum’s net supply turned negative on a rolling 30-day basis this week, with the EIP-1559 burn from base fees once again outpacing fresh issuance to validators. The shift coincides with a sustained pickup in L2-driven settlement activity on mainnet.
The mechanics in one paragraph
Since EIP-1559 (August 2021), Ethereum burns the base portion of every gas fee. When base fees stay elevated enough that the burn exceeds new ETH issued to validators, supply contracts. This is the configuration the network was in for stretches of 2022 and 2023; it had broken back to slight inflation through much of 2024.
What changed
Two structural shifts and one cyclical one. Structurally: rising L2 settlement volume (Arbitrum, Base, Optimism) plus an increase in DEX activity on mainnet have pushed median base fees back above the threshold where the burn exceeds issuance. Cyclically: the broader risk-on tone has lifted on-chain activity across the stack.
Reading the signal
A short stretch of deflationary supply is interesting; a sustained one is structural. The desk is watching the 90-day rolling number — at the time of writing, it remains modestly positive, which suggests caution before declaring a regime shift. Still, the marginal direction of supply has flipped, and that has historically coincided with stronger ETH/BTC relative performance.
About the author
Aryan Patel
Editor-in-Chief · CMT charter-holder · 12 years in markets
Editor-in-chief at Digital Market Chronicle. Covers BTC, ETH and macro cross-currents. Previously ran a cross-asset trading desk. Believes in tight stops and tight prose.
