Ether (ETH), the native cryptocurrency of the Ethereum blockchain, has experienced an unusual trend of continuous inflation for the past 73 days, marking its longest period of ongoing supply increase since the transition known as The Merge in September 2022. During this time frame, more than 112,000 ETH has been newly minted and added to the circulating supply, starting from mid-April.

This shift towards inflationary supply contrasts sharply with the deflationary pattern observed immediately following The Merge, which saw Ethereum transition from a Proof-of-Work to a Proof-of-Stake consensus mechanism. The deflationary trend was primarily driven by mechanisms that burned ETH tokens, effectively reducing the overall supply.

The recent inflationary phase of ETH supply can largely be attributed to Ethereum's Dencun upgrade, which introduced several Ethereum Improvement Proposals (EIPs), most notably EIP-4844. This EIP implemented various measures aimed at optimizing transaction fees and data storage efficiencies. One significant innovation introduced by EIP-4844 is the concept of "blobs," which allow transaction data to be segregated and temporarily stored separately. This innovation has notably reduced transaction fees on Ethereum's layer 2 scaling solutions like Arbitrum and Optimism, contributing to increased transaction throughput and network efficiency.

Despite the recent uptick in supply, Ethereum continues to demonstrate a commitment to reducing its overall ETH supply through ongoing burning mechanisms. Since The Merge, over 345,000 ETH has been burned, amounting to approximately $1.1 billion at current market prices. This burning mechanism plays a crucial role in maintaining Ethereum's deflationary trajectory over the long term, despite temporary periods of supply inflation.

Looking ahead, Ethereum's blockchain enhancements and ongoing protocol upgrades will likely continue to shape the balance between inflationary and deflationary pressures on ETH supply. These dynamics underscore Ethereum's evolution towards greater efficiency, scalability, and sustainability in the broader cryptocurrency ecosystem.