@veronikafaa

Ethereum’s first deflationary quarter in 2025, with a 0.5% supply reduction to 119 million ETH, follows the Merge and EIP-1559, burning $1 billion in ETH, per CryptoSlate. This scarcity drives DeFi lending rates up 20% to 5% APY on Aave, as reduced ETH supply increases borrowing demand—TVL hits $200 billion. Staking yields rise to 4%, with 50% of ETH staked, per Galaxy, attracting more users to EigenLayer ($10 billion TVL). However, higher rates may deter 15% of borrowers, shifting them to Solana, where rates are 3%. While DeFi grows 10% to $4 trillion in DEX volumes, per Funds Society, a 0.54% inflationary reversal could lower rates 5% by 2026, balancing accessibility and yield.

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