Is Ethereum's "Ultra Sound Money" Vision Still Realistic After Dencun?

The Dencun upgrade brought significant improvements to Ethereum’s L2 ecosystem, but it may have inadvertently created a paradox: transaction fees plummeted, ETH burn mechanisms weakened, and the network shifted from deflationary to inflationary. This raises an uncomfortable question—does the “ultra sound money” narrative still hold water?

The Original Promise of Ultra Sound Money

When Ethereum introduced EIP-1559 and later the Merge, the concept of ultra sound money became a core part of the network’s identity. By burning transaction fees and shifting to proof-of-stake, ETH was positioned as a scarce, value-accruing asset. Data showed sustained ETH destruction from mainnet activity, validating this vision.

But Dencun changed the equation.

What Changed with Dencun?

The Dencun upgrade introduced blob storage, allowing L2 solutions to post data at roughly 10x lower costs. The immediate effect: L2 throughput exploded while Ethereum mainnet fees stabilized.

Looking at Base’s metrics over the past 90 days, the numbers tell the story:

• Transaction volume: ~75% increase
• Throughput: ~100% increase
• Payments to Ethereum: virtually unchanged

This is the core problem. L2s are now capturing exponential growth without proportionally increasing ETH burn.

The L2 Concentration Problem

As L2 platforms grow more efficient, a power-law effect emerges. Dominant L2 networks like Base attract disproportionate user activity, consolidating block space demand in single ecosystems. Meanwhile, mainnet utilization remains stagnant because data posting costs haven’t increased despite network growth.

Essentially, L2s are extracting user value from the Ethereum ecosystem without feeding back into the burn mechanism that powers the “ultra sound money” narrative. They function like black holes—pulling users in without measurable impact on ETH scarcity.

Should Ethereum Abandon the Ultra Sound Money Concept?

Abandoning the rhetoric might actually be pragmatic. On current timescales (crypto years move fast), sustained ETH deflation looks unlikely. The modular roadmap’s success means mainnet becomes a settlement and security layer—a role where inflation isn’t necessarily harmful.

In fact, slight inflation could improve liquidity and strengthen L2 economics. Artificial scarcity (see: Bitcoin’s fixed supply) might actually hinder these properties in an era of multi-layered networks.

However, this doesn’t mean accepting inaction. The core developers should:

• Optimize L1 before fully surrendering to L2 expansion
• Make incremental improvements (block time optimization, pre-confirmations) to reduce complexity
• Continue the modularity roadmap rather than reversing course

The real game-changer? ETH ETFs. These structural shifts in institutional adoption may render these inflation/deflation debates irrelevant for the next cycle.

The Ironic Bullish Case

There’s an unexpected silver lining: if L2 platforms are effectively monetizing Ethereum’s security and settlement layer while maintaining user dominance, they’ve created a blueprint for sustainable ecosystem value extraction. For entities like Coinbase building platforms on Layer 2, this is arguably bullish for Ethereum’s long-term positioning—even if it means abandoning the “ultra sound money” marketing angle.

The question isn’t whether Ethereum will remain valuable. It’s whether the story we tell about that value needs to evolve.