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It is commonly said that Ethereum supply will shrink about 2% per year going towards ETH 2.0. However, if most people holding it only stake them, and get additional ETH as reward, and don't spend gas fees to transfer them around, then there is nothing to burn, and the supply can only go up. So how can we know the ETH increased per year will be less than the burned number?

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    How will you measure 'most people'? Predictions about future supply are based on the current network usage. They are just predictions. It is highly unlikely that people will stop operating on the blockchain.
    – Ismael
    Jan 3, 2022 at 6:31

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Here is a cool website that lets you test different settings and see the evolution of the ETH supply accordingly. And as they say:

The ETH supply decreases whenever more ETH is destroyed via fee burn than ETH is created via issuance.

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