Roughly 105 days after Ethereum completed The Merge and transitioned from proof-of-work (PoW) to proof-of-stake (PoS), on-chain data showed a dramatic slowdown in the network’s rate of new ETH issuance. According to metrics cited from ultrasound.money, only 4,790.45 ETH had been added to supply since the switch on September 15, 2022, putting Ethereum’s annualized issuance rate at just 0.014%.
The figure stands out because it highlights one of the most closely watched economic consequences of Ethereum’s move to PoS: a much lower rate of new token creation. Under the former PoW model, issuance was substantially higher because the network had to continuously reward miners at a greater pace. By contrast, under PoS, validator rewards require far less issuance, fundamentally changing the asset’s monetary profile.
Simulation Shows a Sharp Contrast With Proof-of-Work
The same dataset included a simulated comparison showing what Ethereum’s inflation dynamics might have looked like if the network had remained on PoW during the same period. In that scenario, Ethereum’s annual inflation rate would have been approximately 3.58%. By December 29, 2022, the simulated PoW chain would have added around 1,247,674.60 ETH to circulating supply.
That gap is substantial. Instead of supply growth worth roughly $5.7 million under PoS during the post-Merge period cited in the report, a PoW-based Ethereum would have created more than $1.5 billion in additional value over the same timeframe. While both figures depend on prevailing market prices at the time, the comparison underscores how significantly the network’s issuance profile changed after the Merge.
For market participants, this lower issuance rate has been central to the “ultra sound money” thesis often associated with Ethereum. The phrase refers to the idea that ETH’s supply growth can remain constrained—or potentially turn negative—when low issuance is combined with token burning. The article’s metrics do not claim that ETH supply was universally deflationary at every moment, but they do show that the post-Merge issuance rate fell far below what would have been expected under PoW.
ETH Burning Continues to Reduce Net Supply Pressure
Ethereum’s issuance slowdown is only one side of the equation. The network also includes a fee-burning mechanism introduced through the London Hard Fork on August 5, 2021. According to the cited data, roughly 658,000 ETH is burned per year. Since the activation of that mechanism, a total of 2,795,773 ETH had been destroyed, representing about $8.78 billion in value based on the pricing referenced in the source material.
This burn mechanism matters because it offsets part of the newly issued ETH entering circulation. In periods of heavy network activity, more transaction fees are burned, increasing the likelihood that supply growth slows further. In quieter periods, net issuance can still remain positive, but at a much lower rate than in the PoW era. The overall result is a monetary system that is more sensitive to actual network usage.
Data from Dune Analytics cited in the report showed that the largest single source of burned ETH was standard Ethereum transfers, which accounted for 247,008 ETH burned since the London upgrade. This suggests that even ordinary use of the blockchain contributes materially to supply reduction, not just high-profile sectors such as NFTs or decentralized finance.
OpenSea, Uniswap, and USDT Transfers Rank Among Top Burn Sources
Beyond regular ETH transfers, several major applications and transaction categories were responsible for large amounts of burned ETH. NFT marketplace OpenSea and its users had burned 229,928.53 ETH since August 5, 2021, making the platform one of the most important contributors to fee destruction during the period covered.
Decentralized exchange activity also played a major role. Uniswap V2 accounted for 143,394.07 ETH burned, reflecting the intensity of trading and liquidity activity on Ethereum-based markets. Meanwhile, transfers involving the stablecoin USDT were associated with 123,014.14 ETH burned to date, showing how stablecoin settlement can meaningfully affect Ethereum’s fee economics.
The report also identified Swaprouter 02 as the fifth-largest burn source, with 110,868.70 ETH destroyed. Taken together, these categories illustrate that Ethereum’s burn dynamics are distributed across a broad range of on-chain activity, from plain token transfers to NFTs, DEX usage, and stablecoin movement.
Validator Count Nears Half a Million
Ethereum’s transition to PoS has also shifted attention toward validator participation, because validators now replace miners as the actors securing consensus. According to statistics from beaconcha.in referenced in the article, the number of Ethereum validators was approaching 500,000. On December 28, 2022, the network recorded 492,863 validators.
That represented a significant increase compared with roughly 275,054 validators recorded about 12 months earlier. The growth points to expanding participation in Ethereum staking infrastructure and suggests broad interest in validator-based network security after the transition away from mining. The article noted that the count was expected to surpass the 500,000 threshold in 2023.
A larger validator set is often viewed as a positive indicator for decentralization and network resilience, although the raw validator number alone does not capture all concentration risks. Still, the nearly half-million figure showed that the PoS architecture was attracting substantial adoption relatively soon after the Merge.
Compliance Concerns Remain Part of the Discussion
Even as issuance dropped and validator participation rose, the report also highlighted an ongoing concern around block censorship and regulatory compliance. Data from mevwatch.info showed that 69% of blocks produced on Ethereum at the time were being enforced with compliance tied to the U.S. Office of Foreign Assets Control (OFAC).
This metric became a major talking point in the months following the Merge because it raised questions about whether Ethereum block production could become increasingly influenced by U.S. sanctions policy. For critics, a high proportion of OFAC-compliant blocks suggested potential censorship pressure within the network’s transaction ordering process. For others, it reflected how major relays and infrastructure providers were responding to a changing regulatory environment.
The source material did not draw definitive conclusions on the long-term impact of this trend, but it showed that Ethereum’s economic improvements after the Merge were unfolding alongside broader debates about decentralization, neutrality, and infrastructure concentration.
A Different Monetary Profile for Ethereum
Viewed as a whole, the post-Merge data painted a clear picture: Ethereum’s move from PoW to PoS dramatically reduced the rate at which new ETH enters circulation. With only 4,790.45 ETH minted over the first 105 days after the transition and an annualized issuance rate of 0.014%, Ethereum’s supply dynamics looked radically different from the 3.58% annual inflation rate projected under a PoW simulation.
At the same time, the ongoing burn mechanism continued removing ETH from circulation, with total burned supply reaching 2,795,773 ETH since the London Hard Fork. Validator growth toward 500,000 signaled a rapidly expanding staking base, while the share of OFAC-compliant blocks showed that monetary transformation was accompanied by governance and policy questions.
For investors, developers, and network observers, the report reinforced one central point: Ethereum’s transition to PoS was not just a technical upgrade. It also reshaped the asset’s issuance model, changed the economics of supply growth, and deepened the debate over what kind of monetary and governance system Ethereum is becoming.