Ether Becomes Deflationary for First Time Since the Merge: Coinbase

The number of tokens fell by 4,000 over the last week as more ether was burned verifying transactions than was created, the report said.

AccessTimeIconOct 13, 2022 at 10:35 a.m. UTC
Updated Apr 9, 2024 at 11:13 p.m. UTC

Ether (ETH) reached a “post-Merge milestone” this week as it became deflationary for the first time since the Ethereum blockchain switched to proof-of-stake (PoS), crypto exchange Coinbase (COIN) said in a report Thursday.

It became deflationary as more ether was burned verifying transactions than was created in the same period, which led to a reduction of 0.13% in supply over the last week, equivalent to about 4,000 tokens, the note said.

The rate of new ether creation has fallen by nearly 90% since the Merge, the note added.

CoinDesk Special Coverage: The Ethereum Merge

The Merge was the first of five upgrades planned for the Ethereum blockchain and involved the transition to a more energy-efficient PoS consensus mechanism.

Some argued that a drop in the supply of ether should have resulted in higher prices (assuming demand stays constant), but Coinbase noted that the price of the cryptocurrency has fallen about 4% in the last week.

An Ethereum-based token project called XEN triggered ether’s deflationary burn rate when it fueled a large spike in network traffic last weekend, the report said.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Author placeholder image

Will Canny is CoinDesk's finance reporter.