We are now 8 months removed from Ethereum’s most notorious upgrade to date, The Merge. Leading into it, arguably the most discussed topic was how ETH’s new supply dynamics would affect issuance and its price.

So now after two-thirds of a year, how has ETH’s issuance changed since the Merge?

The bar chart above displays the progressive amount of ETH minted and burned since the Merge, with the light blue bars denoting the net issuance. It took roughly 5 months (early February) for ETH to move into a consistent deflationary state. In total, ETH burns have outpaced mints by ~467k ETH ( .39% of the current circulating supply) since September 15th.

Given that ETH issuance is dictated by the reflexive properties of PoS minting and EIP-1559 burns, the rhythm behind its issuance is fundamentally driven by two factors: the amount of ETH staked and the network’s usage/gas.

Since the Merge, the amount of ETH staked has ballooned by 55%, from just under 14M ETH to over 21.6M as of today (with the largest increase after the Shagnhai upgrade- adding 4M ETH in a two-month window). With 14M ETH staked, ~1.7k ETH was issued to validators per day. With the current amount staked (21.6M ETH), the daily issuance jumps to ~2.1k ETH per day.

On the flip side, the average price of gas (60 days post-merge) was merely 22 Gwei. In the last 60 days, we have witnessed that average jump to 51 Gwei, resulting in an additional 2.9k ETH burned per day. The conclusion is simple- higher network activity = higher gas = higher amounts of ETH burned = more deflation. Considering the average daily price of gas (since the beginning of 2020) is 76 Gwei, it’s reasonable to assume the deflation is here to stay.