Ether (ETH)

Ether (ETH) is more than a cryptocurrency traded on exchanges: it is the fuel that powers every computation, transfer, and smart contract execution on the Ethereum network. Anyone who interacts with the blockchain, whether sending a payment, minting an NFT, or calling a decentralized application, pays for that computation in ETH, denominated in gas.

Since the Merge in September 2022, Ethereum runs on Proof of Stake rather than energy-intensive mining. Validators lock up ETH, roughly 30% of the approximately 121 million ETH in circulation, in exchange for the right to propose and confirm blocks, earning new issuance as a reward. This replaced the old miner-reward model and cut new ETH issuance by around 90% almost overnight.

A separate mechanism, EIP-1559, permanently burns the base fee portion of every transaction instead of paying it to validators. During periods of heavy demand, burning can outpace new issuance, shrinking ETH's total supply, a dynamic nicknamed "ultrasound money." Since the 2024 Dencun upgrade shifted much layer-2 activity off mainnet, average gas fees and burn rates have fallen, leaving ETH supply mildly inflationary rather than deflationary. Unlike Bitcoin, ETH has no maximum supply cap, so long-term scarcity depends on ongoing network usage and protocol rules rather than a fixed ceiling.