The long awaited network upgrade to Ethereum finally happened on September 15th under the code name The Merge. This upgrade made the transition for Ethereum from prof of work to proof of stake.

This made the network more efficient and using less energy. Of course everything comes with pros and cons and some believe that it made it more centralized and less censorship resistant.
Since PoS is a more efficient consensus, another key change was the reduction of the inflation for 90%. From 4.3% to 0.43% or in absolute numbers from around 13k ETH issued daily to 1.6k. This is without the burns.


 


![01.png](https://files.peakd.com/file/peakd-hive/dalz/23tvB1s5yTeeddAiKX4w7u2n9tdcZRS5tZ3D6cjnEAFVZxUKSrdiSwG8yc5P9Z9iE3U4k.png)


Here we e will be looking at:
-	Daily Inflation and Burns
-	Overall Supply
-	Number Of Wallets
-	Active Wallets
-	Transactions
-	Fees

The data presented here is mostly gathered from [the etherscan charts]( https://etherscan.io/charts).


## Daily Inflation and Burns
This is one of the hot topics for Ethereum after the merge. A lot of people are saying that Ethereum will now become a *ultrasound money* with a deflationary supply.

This is because of the reduction in the amount of new daily tokens issued in combination with the burns that are coming from the fees. The burning mechanics was introduced last year in August 2021.
 
First the chart for the amount of **new ETH issued daily for the period 2015 – 2022**. 

 

![image005.png](https://files.peakd.com/file/peakd-hive/dalz/23xKpKnwnoWCDCR1FFDTLk8zbiQ5FDB1btMoDibTtvYmxEUQue4MPgxeNjHYztAiTM5oQ.png)


This is an all time chart for the amount of ETH issued daily for context. We can see that at the beingnn there was a period with more than 30k ETH issued daily, then it dropped to around 13k. 
In the last year after the burns were introduced, on a few days the burning was higher than the  new ETH entering circulation. This happened mostly on the top of the market cycle. 

**When we zoom in 2022 we get this:**

 

![image007.png](https://files.peakd.com/file/peakd-hive/dalz/23tGc5xaDoY548tFcYofvsdjy75Q4x7snn8KLWT3VUKSgCeS3nzadYVk98bZLzQu4bJMy.png)



We can clearly see the sharp drop in the inflation at the end of the chart in September 2022. We can also notice that the amount of ETH burned has been dropping as well. Because of this even with the huge reduction in the inflation ETH has been on the verge of being deflationary and overall has ended in positive inflation after the merge. 
But if we get just a bit higher activity on the chain, or close to the previous bull run, ETH can become deflationary very easy, since the issuance of new tokens is very small now.

The **monthly** chart looks like this:
 




![image011.png](https://files.peakd.com/file/peakd-hive/dalz/23tS2pRaUm4Z8mJuxHdQPWQULpN53Dm78nmdugKtRY6dwB1gmFFnEYkh1n3ue8GEEQEt7.png)


I have included the previous year here for reference. We can see the drop in the monthly inflation after August 2021 and the introductions of the burns. The lowes month for inflation has been January 2022 with just a 0.02% monthly inflation. November 2021 was also with a very low inflation.
As for September we can see that it ended with 0.16%, although half of the month was with high inflation. October 2022 for the first 10 days is deflationary, but we will see how it goes. 

The table for the yearly inflation looks like this.

| Year | ETH Inflation |
|------|-----------|
| 2016 | 12.95%    |
| 2017 | 9.57%     |
| 2018 | 7.15%     |
| 2019 | 4.56%     |
| 2020 | 4.36%     |
| 2021 | 3.24%     |
| *2022 projected* | *2.2%*     |


From more than 10% down to 2% this year. We will see how will the next 2023 be, but for sure it will be lower since the maximum is **0.43%**, and with enough burns it might even end up deflationary.
  
## Supply

The overall supply now looks like this:



![image001.png](https://files.peakd.com/file/peakd-hive/dalz/EoChAufoy9Z1mTNKWsY7HaM4Hpps4U142szE69TSdsyP42pz52Sv8fXD2M6sJboiLgV.png)



A steady increase in the supply from just above 70M in 2015 to 120M where we are now. 
We can notice some drops in the supply in 2021 and 2022. 

**When we zoom in 2022 we get this:**




![image003.png](https://files.peakd.com/file/peakd-hive/dalz/23uQkGba76CU17e3Z9f4nzx4XvpSj8DCF12Wx8hb2SjNvB5S3NCJZiVm9uk9yzqNpeBah.png)


A flattening starting from September 15th!
In the period after September 15, till now October 10, just above 8k ETH was issued. This amount of ETH prior to the upgrades was issued in a day. 



## Number of Wallets
Here is the chart for the total number of Ethereum wallets created.


 

![image013.png](https://files.peakd.com/file/peakd-hive/dalz/23tvVmjfP8nFayTJkConUCZNu294prt1TvGdC6BZGD1X2q3w2HRjnS238zpJTdscGsqs1.png)





Ethereum now has more than **200M** wallets!
It is the leading blockchain in crypto by the number of wallets. For comparison bitcoin is still under 100M wallets. 


When we look at the number of **new wallets created** daily we get this chart. 
 



![image015.png](https://files.peakd.com/file/peakd-hive/dalz/EogLNqtsdK6FRFBzdaUwhZVoavdYUx7W315mNmqdLAW1mk3P4sznGw6hk7Sf25ktn7Y.png)



This is starting from 2022.
A steady number of new wallets created and then a spike in the last few days. From 70k up to 230k per day. A bit weird. Maybe some app is making a lot of wallets now.

## Active wallets
How many of the are being used? 
Here is the chart for 2022.
 



![image021.png](https://files.peakd.com/file/peakd-hive/dalz/23wC5hXZdEo4VnHRwuqqa6YLDaACAsHiPPRJJfdbvP2eqAJe6rPmFeQHCv5ZP7GN1btqf.png)



The numbers of daily active wallets have been quite steady through the year in the range of 500k to 600k DAUs. No significant impact from the merge here.
In the last year the number of active wallets reached an 800k per day.


## Transactions 
How about the number of transactions? Is the Ethereum network now more active after the merge? Here is the chart.

 


![image025.png](https://files.peakd.com/file/peakd-hive/dalz/EoK5NVNFo56gfk5QgTvPrxDrFSM67Fk7eVo7YKsxx6ZUURDZEDzKoMPb72yyh2tC6Nz.png)


There seems to be a very small uptrend in the numbers of transactions per day, but nothing significant. At the moment around 1.2M transactions daily on the Ethereum network  


## Fees
There was misunderstandings that the merge will make the fees on Ethereum smaller. But this is not the case. The merge is an consensus upgrade, not a scalability upgrade. That should come later with sharding. Here is the chart for the fees in 2022. 

 


![image027.png](https://files.peakd.com/file/peakd-hive/dalz/23tRvE7R7bXXykePTNoLJKjbjeSUnDxXFm679xhAXG1nooSTaWorm83PmdxbYe4m2rAGN.png)



The ETH fees has been going down, especially in the first part of the year, but this is mostly because of a lower activity network. In the last months the average fees are in the range of 2$ to 3$, and they have stayed around the same after the merge. 
A lot smaller fees in the last months, unlike the 50 plus dollars at the beginning of the year, but this is just because of the lower network activity. 



----

The biggest impact that The Merge made on the Ethereum network is on its inflation. There is much less new tokens issued daily now, but the overall inflation in the first 20 days still remains positive with more than 8k ETH issued after the merge. If there is a bit more activity on the network and more ETH burned trough fees things can change fast. Of course one more thing that has changed is the hash rate, but that one has just went to zero, while there is almost half a million validators staking around 13M ETH for network security. 

The other metrics like number of transactions, active wallets and fees remains around the same and in relation with the previous activity. There has been an increase in the numbers of new wallets created in the last few days. 

All the best
@dalz