On September 15, 2022, Ethereum did something plenty of people in tech thought was close to impossible. It swapped out the engine of a live network worth close to $200 billion, without stopping it.
That event was called the Merge. Ethereum moved from proof of work, where miners burn electricity to secure the chain, to proof of stake, where validators lock up ETH instead. The Ethereum Foundation's estimate is that energy use dropped by more than 99.9%.
Before the Merge, one of the most repeated criticisms of crypto was energy. Ethereum used roughly as much power as a small country. After the Merge, that argument mostly stopped applying to it. And yet the price didn't care. ETH traded lower in the weeks after the upgrade, right in the middle of a brutal bear market.
That's the first lesson hiding in this story. The biggest technical achievement in Ethereum's history didn't produce a rally. Markets pay for demand, not for engineering.
The second change was about supply, and it gets less attention than it should.
A year earlier, in August 2021, an upgrade known as EIP-1559 started burning part of every transaction fee. When the network is busy, more ETH gets burned. When it's quiet, less does.
After the Merge, new ETH issuance also dropped sharply, because validators earn far less than miners used to. Put the two together and you get something unusual. In busy periods, more ETH can be burned than created, and the total supply actually shrinks. In quiet periods, it grows slowly.
So Ethereum doesn't have a fixed supply like Bitcoin's 21 million. Its supply depends on how much people use it. That's a very different bet. Bitcoin says the rules never change. Ethereum says usage decides.
Neither is automatically better. Bitcoin's model is simple and easy to trust. Ethereum's model rewards activity, but it also means that if activity moves elsewhere, to layer twos or to other chains, the burn slows and supply creeps back up. That debate has run ever since, and it's one reason ETH at $2,526 gets argued about more than almost any other large asset.
There's also the staking side. Locking ETH to secure the network earns a yield, which turned ETH into something that looks a little like a productive asset. Some people love that. Others worry about how much stake ends up concentrated in a handful of large providers.
What strikes me most, looking back, is how calm it was. The switch happened, blocks kept coming, and most users didn't notice anything at all. For something that risky on paper, it went about as smoothly as anyone could have hoped.
Maybe that's the real signal. The best infrastructure is the kind you stop thinking about.
Do you see Ethereum's usage-based supply as a strength or a weakness compared with Bitcoin's hard cap?
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Personal view, not advice. Do your own research and carry your own risk.