https://ethereum.org/en/upgrades/merge/issuance/

We can break the supply of ETH into two primary forces: issuance, and burn.

The issuance of ETH is the process of creating ETH that did not previously exist. The burning of ETH is when existing ETH gets destroyed, removing it from circulation. The rate of issuance and burning gets calculated on several parameters, and the balance between them determines the resulting inflation/deflation rate of ether.

• Mining rewards ~13,000 ETH/day pre-merge
• Staking rewards ~1,600 ETH/day pre-merge
• After The Merge, only the ~1,600 ETH per day will remain, dropping total new ETH issuance by ~90%
• The burn: At an average gas price of at least 16 gwei, at least 1,600 ETH is burned every day, which effectively brings net ETH inflation to zero or less post-merge.

How ETH gets issued will change at the time of The Merge. Currently, new ETH is issued from two sources: the execution layer (i.e. Mainnet) and the consensus layer (i.e. Beacon Chain). After The Merge, issuance from the execution layer will go to zero. Let's break this down.

Under proof-of-work, miners only interact with the execution layer and are rewarded with block rewards if they are the first miner to solve the next block. Since the Constantinople upgrade in 2019 this reward has been 2 ETH per block. Miners are also rewarded for publishing ommer blocks, which are valid blocks that don't end up in the longest/canonical chain. These rewards max out at 1.75 ETH per ommer, and are in addition to the reward issued from the canonical block. Mining is an economically intensive activity, requiring high levels of ETH issuance to sustain.

The Beacon Chain went live in 2020. Instead of miners, it is secured by validators using proof-of-stake. This chain was bootstrapped by Ethereum users depositing ETH one-way into a smart contract on Mainnet, which the Beacon Chain listens to, crediting the user with an equal amount on the new chain. Until The Merge happens, the Beacon Chain's validators are not processing transactions and are essentially coming to consensus on the state of the validator pool itself.

Validators on the Beacon Chain are rewarded with ETH for attesting to the state of the chain and proposing blocks. Rewards (or penalties) are calculated and distributed at each epoch (every 6.4 minutes) based on validator performance. The validator rewards are significantly less than the miner rewards issued on proof-of-work (2 ETH every ~13.5 seconds), as operating a validating node is not an economically intense activity and thus does not require or warrant as high a reward.

Total ETH supply: ~119,300,000 ETH (as of Q2 2022)

Execution layer issuance:

• Estimating at 2.08 ETH per 13.3 seconds*: ~4,930,000 ETH issued in a year
• Currently inflating at ~4.13% (4.93M per year / 119.3M total)
• This includes the 2 ETH per canonical block, plus an average of 0.08 ETH over time from ommer blocks. Also uses 13.3 seconds, the baseline block time target without any influence from a difficulty bomb. (See source)

Consensus layer issuance:

• Using 13,000,000 total ETH staked, the rate of ETH issuance is ~1600 ETH/day (See source)