Did L2 destroy Ethereum's ultrasonic currency?

Ethereum's most famous marketing slogan was "Use and destroy"-every transaction burns ETH, thereby reducing supply. However, when the network solved the expansion problem, activities migrated to the secondary network, and the amount of combustion dropped sharply. The expansion was successful, but the scarcity failed to continue.

Summary

Ethereum's "ultrasonic money" theory believes that the fee burning brought by EIP-1559 will exceed new issuance, making ETH into a deflationary state and becoming a superior value storage tool than Bitcoin. This theory was briefly established after the 2022 merger. But the March 2024 Dencun upgrade shifted activities to the second-tier Rollup network, which pays almost zero fees, and daily burning plummeted from thousands of ETH to 50 to 70 ETH. Since then, ETH has shown moderate inflation. Depending on the statistical cycle, the annualized net supply has increased by about 0.2% to 0.8%, reversing the deflation promised by theory. The Fusaka upgrade in December 2025 introduced EIP-7918, or blob fee floor, designed to restore minimum burn volumes. Fidelity simulations show that if the mechanism takes effect from 2024, approximately $78.6 million in additional ETH will be burned over 93% of the days. A deeper contradiction remains unresolved: a cheap and expanded Ethereum burns less than a congested and expensive Ethereum, so the network's success as an infrastructure is contrary to its scarcity as an asset.

For about eighteen months, Ethereum has the best story in the cryptocurrency world, and the story itself is a paradox: the more people use the Internet, the scarcer its tokens will become. Every transaction burns a little ETH. When the network is busy enough, the amount burned exceeds the amount created, and the supply drops. The community calls it a "ultrasonic currency," a deliberate provocation to Bitcoin's "sound currency", coupled with bat emoticons and a campaign. For a while, data supported this. Then Ethereum did what it had promised to do for years-expand capacity, and expansion broke the story. Activity shifted to the secondary network, which paid almost zero fees to the basic chain, the combustion volume collapsed, and ETH quietly returned to inflation. This is the story of how Ethereum's greatest technological success disintegrated its best economic narrative, and whether December's upgrade could put the pieces back together.

The true meaning of "ultrasonic money"

The mechanism is worth understanding accurately because the entire debate revolves around it. In August 2021, Ethereum activated EIP-1559, changing the way transaction fees operate. Each transaction is no longer paid directly to the miners, but a basic fee is paid, which is destroyed and permanently withdrawn from circulation. The busier the network, the higher the basic cost and the more ETH is destroyed. For that reason, this is just a cost-burning mechanism. When Ethereum changed from proof of work to proof of stake through a merger in September 2022, it became a theory of money because the circulation of the new ETH was reduced by about 90%, and the network no longer had to pay for energy-intensive miners. Combine the two and you get the theory of "ultrasound". After the merger, issuance dropped to a trickle, and burning continued with each transaction. If burning exceeds issuing, the total supply of ETH will decrease over time, putting assets into deflation. An asset with deflation and growing demand should theoretically appreciate. Ethereum will become "harder" than Bitcoin because the supply of Bitcoin is still growing, hence the name "ultrasound." The tracking website ultrasound.money is here to show this: supply is declining day by day. This did happen for some time after the merger. Supply fell back to even below levels during the consolidation period, burning outstripped issuance. This narrative is not hype; during that window, it is an accurate description of the data. This is why it is so powerful, and why its reversal is so embarrassing.

How expansion breaks it

The turning point came when Ethereum solved its most famous problem, which was ironic. Ethereum's capacity expansion strategy is to move transactions from the expensive base layer to second-layer Rollup networks such as Arbitrum, Optimism and Base, which process transactions cheaply, and then publish compressed data back to Ethereum for security. The base layer becomes the billing and data availability layer;Rollup handles the actual activity. This is the roadmap Ethereum has pursued for many years and has worked well. The Dencun upgrade in March 2024 is a key node. It introduced EIP-4844, or "blob" transactions, to provide a separate and cheaper data channel for Rollup to publish data. The cost of second-layer networks has dropped by 10 to 100 times. Previous activities that occurred on the main network, paid for main network fees, and burned main network ETH were transferred to Rollup, which paid for blob fees. Due to the severe excess of blob space relative to demand, these fees were actually close to zero. The impact on combustion is immediate and serious. Prior to Dencun, Ethereum burned thousands of ETH every day during busy periods. After Dencun, daily combustion fell to as low as 50 to 70 ETH. The base layer lost its main source of expenses. With daily circulation of about 1700 ETH and burning much lower, the equation reversed: Ethereum began to create more ETH than it destroyed. According to various statistics from 2025 to 2026, the annualized net inflation rate is approximately between 0.2% and 0.8%, depending on the statistical window. ETH supply once again exceeded the level of the consolidation period. Deflation is over. The mechanism that created "ultrasonic money"-the mass burning of EIP-1559-was not removed, but was bypassed. Activity only shifted to a level where the amount of combustion was negligible. Ethereum has successfully expanded its capacity, thus cutting off the connection between usage and scarcity on which the entire theory relies.

Bullish view: It still works, just in a different way

The response of Ethereum defenders is not denial, but a redefinition, and some of their arguments are indeed strong. First point: Elastic scarcity is the real feature, not permanent deflation. Ethereum has never been designed to permanently deflate at a fixed rate. It is designed to burn in proportion to demand, which means it deflates when the network is busy and moderate inflation when the network is calm. During a period when main-network activity is high and the average gas fee exceeds about 16 gwei, combustion still exceeds issuance, and ETH will temporarily enter net deflation. The mechanism works exactly as designed; only the expanded network spends more time in a calm state. Under this interpretation,"ultrasonic money" has always been conditional, and the conditions are needs, not commitments. Second point: Circulation is still much lower than before. Even in moderate inflation, Ethereum issued about 90% less ETH than during the proof-of-work period. Compared to Bitcoin, which currently has an annualized inflation of about 0.8% on a fixed schedule, Ethereum's net inflation of about 0.2% in calm times is actually lower. Both assets will be inflationary in 2026; by some measures, Ethereum's inflation rate is even lower. Even without net deflation, the term "harder than Bitcoin" still holds true on a narrow technical level. Point three: Supply numbers exaggerate selling pressures. About 28% to 30% of ETH is locked in pledge, generates revenue and is not negotiable. Tradable liquidity-the actual ETH available on exchanges-is much less than the total supply figure and decreases as more ETH is pledged. A moderately inflationary total supply, coupled with a large and growing pledge component, has pressures that are very different from what the raw inflation numbers imply. Demand from ETFs, corporate treasuries and pledges can easily absorb 0.2% inflation. Point four: The case of store of value has never relied solely on deflation. As long as demand for Ethereum's block space-its role as a stablecoin, tokenization and DeFi clearing layer-grows faster than supply, prices are likely to rise, regardless of whether supply grows by 0.2% per year. Scarcity is a good story, and utility is the real theory.

Bearish view: The narrative was the support

The skeptics 'interpretation is that the "ultrasound" story is not just marketing, it plays a practical role in the investment case, and that losing it is more important than redefining what is recognized. The straightforward statement comes from data and observers on the chain. Ethereum's daily network fee revenue fell from nearly $40 million in early 2025 to a local low of about $10 million in 2026. This is not just a burning issue, but also a value capture issue. If the base layer captures only a small amount of fee revenue because activity occurs on Rollup, which pays almost no fees, then holding ETH is betting on an asset that is not being fully realized by users on its own network. Some analyses directly attribute this to the loss of developers and reduced whale support, viewing the end of "ultrasonic money" as the end of a period when ETH had a clear, quantifiable reason for appreciation. The deeper problem is structural and irrefutable: a scalable and efficient Ethereum is less deflationary than a congested and expensive Ethereum. This is the tension at the core of the entire debate. It is the factors that make Ethereum a better infrastructure-cheap transactions, higher capacity, activity on fast Rollup-that reduce the amount of burn. Ethereum cannot simultaneously become the cheap, high-throughput clearing layer it wants to be and the deflationary asset for the burning costs required by the "ultrasonic" theory. The two are in direct conflict, and the road map chooses expansion. Asset theory was in a sense sacrificed to the technology roadmap. Then there is the value capture problem exacerbated by Rollup. Layer 2 networks take advantage of Ethereum's security and pay a negligible fee for it. Robinhood's own chain is an example: An analysis of Enterprise L2 shows that the base layer captures only a fraction of the economic value, yet provides the security that makes the entire arrangement credible. If the future of Ethereum is thousands of Rollups settled on it cheaply, then Ethereum is providing huge value but only capturing a very small part of it, and no narrative redefinition will solve the value capture problem that exists in the fee structure.

The fix no one talks about

This led to December 2025 and that part of the upgrade that was designed to address this issue but was ignored by most markets. Fusaka upgrade will be activated on December 3, 2025. Its main features are related to further capacity expansion-PeerDAS and expanded blob capacity. But buried in it is EIP-7918, or the "blob base cost floor," which is the most straightforward attempt to repair the burn to date. The problem Dencun poses is that when execution costs dominate and blob demand is weak, blob fees can plummet to near zero (1 wei), which means Rollup consumes Ethereum's capacity almost for free and burns almost nothing. EIP-7918 sets a lower limit: It pegs the minimum blob fee to the execution base fee, which is roughly the execution base fee divided by 16, so that even during calm times, Rollup pays a meaningful minimum fee to produce a lowest ETH combustion stream. The modeling results are shocking. Fidelity Digital Assets analyzed what would have happened if EIP-7918 had been effective since the blob was launched and found that in 93% of the days since the 2024 Dencun upgrade, adjusted fees would have exceeded actual fees, cumulatively generating approximately $78.6 million (approximately 24,641 ETH) in additional blob fee revenue. Blockworks points out that if the mechanism is introduced in June 2025, the cost of burning blobs will be almost eight times higher. The intention is clear: restore a lower limit for burn so that when stablecoins, DeFi and tokenization migrate to Rollup, ETH can still capture value from these activities rather than subsidize them. The honest statement is that this is a lower limit, not a recovery. EIP-7918 prevents burning from falling to zero; it will not replicate the thousands of ETH burned per day in the congested main-network era. Whether it produces measurable, sustained deflation depends on how much activity flows through the blob and how high the base cost of execution is, and markets are still watching. This is a serious, well-designed attempt to reconnect usage with scarcity. But it's not going back to 2022.

Honest comparison: sound money versus ultrasonic money

Since the entire theory was constructed as a blow to Bitcoin, it is worth putting aside tribalism and placing the two currency models side by side, because the comparison is more interesting than either side admits. Bitcoin provides fixed scarcity. The supply schedule is written into the agreement, with a ceiling of 21 million units and halved approximately every four years based on a predictable schedule. Holders can know with certainty today how much Bitcoin will be issued in 2030 and 2040. This certainty is the entire product. Bitcoin does not respond to demand, does not burn, or adjusts; it is just issued on a schedule, moving towards a hard cap, and inflation is currently around an annualized 0.8% and will move towards zero in decades. The trade-off accepted by Bitcoin holders is that the base layer provides little native utility and benefits. You hold it for certainty and give up productivity. Ethereum provided, and to some extent still provides, elastic scarcity. Supply responds to network demand: High usage burns more, potentially pushing ETH into net deflation; low usage burns less, allowing moderate inflation to pass. The appeal is that a token becomes most scarce precisely when it is most widely used, tying the scarcity of an asset to the success of its network. The trade-off exposed in the L2 era is that elasticity is a double-edged sword. Demand-responsive supply deflates only when demand is high at the level where combustion occurs, and Ethereum deliberately shifts demand to the level where it does not burn. Bitcoin's rigidity-often criticized for its lack of flexibility-turned out to be the factor that allowed its monetary promises to be fulfilled. Ethereum's flexibility-often praised as subtlety-turned out to be the factor that made its monetary commitments conditional. An honest score card is that these are different products for different buyers, not good and bad versions of the same thing. Bitcoin sells certainty and requires you to relinquish utility. Ethereum sells utility and requires you to accept that its scarcity depends on how the utility is used. The era of "supersonic money" was a short window, when Ethereum seemed to provide both-the certainty of deflation and the effectiveness of the work network-and this window was closed not because Ethereum failed, but because it successfully expanded. Holders who choose between the two in 2026 are actually choosing whether guaranteed scarcity without benefits or demand-driven scarcity with pledged benefits and network utility. Viewed in this way, the loss of "ultrasonic money" is not so much a failure as a clarification: Ethereum was never Bitcoin, and the burning mechanism has been concealing how different the two bets are in fact.

What does this mean for holding ETH

Putting aside narrative arguments, the real question is whether the "ultrasound" story has an impact on prices, and the troubling answer is that it is hard to say because ETH has been performing poorly throughout the period. The intuitive approach is: Ultrasound theory reached its strongest immediately after the merger, and has steadily disintegrated since Dencun in March 2024. During the same period, ETH has been underperforming relative to Bitcoin and its own historical highs. Either the market is pricing the loss of a deflationary narrative, or the market has never cared about it, and the problems with ETH lie elsewhere-the leakage of L2 value, competition from Solana, the huge difficulty of the modular roadmap itself. Both interpretations make sense and point to different conclusions about whether repairing burning can repair prices. The most honest framework is that "ultrasonic money" is a proxy for a real question that has not disappeared: Can Ethereum capture value from its own success? When the network is congested and expensive, the answer is obvious; burning makes it clear. As the network expands and becomes cheap, the answers become blurred and the burning stops telling stories. EIP-7918 attempts to make the answer clear again by setting a lower limit for value capture. Whether it is effective will not be reflected in marketing, but will be reflected in two numbers for the coming year: net ETH supply and base-level expense revenue. If both improve significantly, the theory will gain a second life. If not, then "ultrasonic money" is just a phase, not an attribute, and the Ethereum investment case must rely solely on utility, which will be a more difficult, slower, and less convenient argument to spread on social media than a reduction in supply.

FAQs

What is Ethereum's "ultrasonic currency"? It refers to the theory that Ethereum's ETH tokens will enter deflation and become a superior store of value than Bitcoin. It is based on two mechanisms: EIP-1559 activated in 2021, which burns a portion of the fee per transaction; and a 2022 merger that cuts new ETH issuance by about 90%. When burning exceeds issuance, the total supply decreases. The term is a parody of Bitcoin's "sound money" brand.

Will Ethereum still deflationary in 2026? [TAG 71] Under normal conditions, it is not net deflation. After the Dencun upgrade in March 2024 shifted activities to cheap second-tier Rollup, combustion volume collapsed and ETH turned to moderate inflation. Depending on the statistical cycle, annualized net supply increased by approximately 0.2% to 0.8%. It may still temporarily turn into deflation during a brief period of high activity on the main network, but the persistent deflation that occurred immediately after the merger is over.

Why does the secondary network destroy combustion? Because they shift activity from the base level (where transactions burn meaningful ETH) to Rollup, where they pay almost zero fees. The Dencun upgrade introduces cheap "blob" transactions to Rollup, reducing its costs by 10 to 100 times. The oversupply of blob space has reduced blob costs to near zero and daily burning has dropped from thousands of ETH to as low as 50 to 70 ETH. The activity continued, but the burning did not shift with it.

Does this mean ETH is a worse investment? Not necessarily. Defenders offer several rebuttal points: Issuance is still about 90% lower than during the proof-of-work period; net inflation of about 0.2% during the calm period is actually lower than Bitcoin; nearly one-third of ETH is locked in pledge and not circulated in the market; and the real case lies in the need for block space, not deflation. Critics counter that base-level fee revenue has also fallen sharply, raising real value capture issues.

What is EIP-7918? This is a change introduced in Ethereum's December 2025 Fusaka upgrade, which sets a minimum price for blob transactions and is linked to the execution base fee (roughly divided by 16). It prevents blob charges from plummeting to near zero during calm times, ensuring a minimum flow of ETH combustion. Fidelity simulations show that if the mechanism existed earlier, approximately $78.6 million in additional ETH would have been burned cumulatively over 93% of the days since 2024.

Has Fusaka restored "ultrasonic currency"? No, it sets a lower limit on burning rather than restoring a post-combined deflationary state. EIP-7918 prevented burning from falling to zero and improved value capture when activities moved to Rollup, but did not reproduce the burning of thousands of ETH per day during congested main-network periods. Whether it produces sustained net deflation depends on blob activity and execution costs, and remains to be seen.

Is Ethereum still "harder" than Bitcoin? On a narrow technical level, sometimes yes. In calm times, Ethereum's net inflation of approximately 0.2% may be lower than Bitcoin's fixed-schedule inflation of approximately 0.8%. But Bitcoin provides predictable, agreed-upon indefinite scarcity, while Ethereum's supply is elastic and responds to demand, so inflation may be more during periods of calm and expansion. They provide different types of scarcity: fixed and certain versus elastic and demand-driven.

What should I focus on to determine whether the theory is restored? Two numbers for the coming year: net ETH supply growth, and Ethereum base layer fee revenue. If EIP-7918 and growing Rollup activity push net supply back flat or negative, while base income recovers from a low of about $10 million, the story of value capture will be restored. If supply continues to grow and fee revenue remains sluggish, then "ultrasonic money" is only a temporary period, and the ETH case will rely solely on utility and demand.

Disclaimer

This document is for informational and educational purposes only and does not constitute financial or investment advice. It describes monetary mechanisms and network upgrades, the effects of which are uncertain and still developing. Nothing in this article constitutes a recommendation to buy or sell any assets. Please be sure to study it yourself. Figures on supply, combustion and inflation continue to change and are accurate as of July 17, 2026.