Definition ∞ ETH Inflation refers to the rate at which new Ether tokens are created and added to the total circulating supply of the Ethereum network. Historically, this involved block rewards issued to Proof-of-Work miners. The issuance rate influences the scarcity and economic properties of Ether. It represents the increase in the total quantity of Ether available over time.
Context ∞ Post-Ethereum’s transition to Proof-of-Stake and the implementation of EIP-1559, discussions around ETH inflation have significantly changed. News now frequently highlights how the network’s burn mechanism can lead to periods of deflation, where more ETH is burned than issued, effectively reducing the supply. This potential for negative inflation has led to the term “ultrasound money” for Ether. Monitoring ETH inflation is crucial for understanding the long-term value proposition of the asset.
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