Ethereum Gas Fees Hit New Low for 2023 as DeFi, NFT Activity Drops.With activity waning, Ethereum’s “ultrasound money” meme is under attack as supply is currently growing at an annual inflation of 0.44%.

Ethereum transaction costs on the mainnet fell to their lowest levels of 2023 as on‑chain activity in key sectors like DeFi and NFTs cooled, weakening the burn mechanism that underpins Ethereum’s post‑Merge “ultrasound money” narrative. Decrypt reports that with fewer transactions competing for block space, base fees dropped sharply and ETH’s net supply flipped to a modest annualized inflation of about 0.44%, instead of remaining deflationary as many proponents had anticipated. The backdrop is Ethereum’s fee and burn model introduced by EIP‑1559 in 2021, where a portion of every transaction fee is destroyed (burned), and the Merge in 2022, which shifted the network to proof‑of‑stake and substantially reduced new ETH issuance. In periods of high demand—such as the 2021 DeFi boom and NFT bull market—this mechanism caused the burn rate to exceed issuance, briefly making ETH net deflationary and fueling the meme that ETH was “ultrasound money.” In 2023, however, on‑chain usage normalized and fees routinely hovered near the low end of the historical post‑2021 range (roughly around a few dollars or less per transaction), reducing the amount of ETH burned and allowing supply to grow again. This dynamic matters because it illustrates that Ethereum’s monetary profile is activity‑dependent: the same protocol that can make ETH deflationary in high‑usage environments can leave it mildly inflationary when DeFi trading, NFT minting, and other on‑chain interactions slow. It also highlights the trade‑off between user affordability and the “sound money” narrative—low gas fees improve accessibility and usability but weaken the argument that ETH is structurally deflationary, putting renewed focus on broader demand drivers (L2 adoption, new applications, and future upgrades) rather than purely on the fee burn.

✨ AI-generated background, compiled from web sources — not editorial content.

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