This article is compiled and organized by BlockWeeks
Since its launch in 2015, the Ethereum supply distribution has always been the focus of controversy and discussion. The core reason is that approximately 72 million ETH (about 60% of the initial total supply) was allocated to early contributors and investors through the ICO presale at the genesis stage, rather than being gradually released to the public through proof-of-work (PoW) mining like Bitcoin. Critics have long argued that for any token whose initial allocation is determined before the public chain is officially opened to the public, its distribution structure is more easily exploited by early investors and protocol insiders, thereby causing the concentration of control and power over the public chain—such practices of completing allocation before a public offering are collectively referred to as "pre-mining," including initial coin offerings, pre-allocation to early contributors, DAOs, and foundations, etc.
However, despite the controversial initial allocation, the new issuance brought by PoW mining over the past seven years has successfully diluted about 68% of the pre-mined supply, making ETH one of the most widely distributed and most decentralized native tokens in the entire crypto ecosystem apart from Bitcoin. At an issuance rate of 2 ETH per block, it would take approximately 5 years to fully dilute the 72 million pre-mined supply under PoW consensus. However, Ethereum is about to transition from PoW to proof-of-stake (PoS) through The Merge upgrade, at which point ETH issuance is expected to decline significantly. This also makes the current supply distribution situation unprecedentedly important.
The Original Sin of Pre-mining: Why Supply Distribution Deserves Repeated Scrutiny
If token issuance is regarded as creating value on the blockchain, then a broad distribution at network launch means that this value is shared relatively evenly among participants and stakeholders. Whether token distribution is equal is an important dimension for evaluating the degree of decentralization and censorship resistance of a public chain: the more widely ETH is distributed, the more dispersed the stake in the network's success; conversely, the more uneven the distribution, the more likely it means that a small number of insiders and early investors hold disproportionate influence over the development and operation of the chain.
The diffusion of Ethereum's supply partly comes from the natural effect of market cycles—repeated bull and bear rotations have created selling pressure on early holders at different times; another part comes from the PoW mining mechanism itself, as newly issued ETH continuously dilutes the genesis supply. Since genesis, approximately 49.1 million ETH has been newly issued and distributed through PoW mining.
On-chain Data: 10.3 Million ETH Flowed into Exchanges, Whale Share Fell from 98% to Below 80%
Statistics from on-chain data institution Nansen show that since the network's genesis, approximately 10.3 million ETH has been sent to exchanges; while during the same period, only about 1.6 million pre-mined ETH has never been moved, accounting for about 2.3% of the pre-mined supply. Breaking down supply metrics by account type reveals that the top ten accounts by ETH balance are usually not controlled by individual users, but by exchanges and smart contracts.
The HODLwaves chart, which tracks the "time since the token was last moved," also supports the conclusion that "the share of ETH controlled by early investors and whales (addresses holding more than 1,000 ETH) has fallen significantly since genesis": currently more than 75% of the total ETH supply has been traded or transferred within the last three years. Of course, this metric has limitations—it cannot distinguish transfers between different accounts of the same entity. If a user moves funds between two addresses they control, the tokens appear to have "moved," but the underlying ownership has not changed, so this analysis can at best serve as an approximate reference for the degree of token diffusion between user and contract accounts.
In addition to holding duration, on-chain data can also directly compare the simple distribution of ETH across all addresses. Data shows that the majority of the total ETH supply is still concentrated in whale accounts with balances exceeding 1,000 ETH, but this proportion has dropped from 98% to less than 80% currently, which is a positive signal, meaning that the share held by accounts with smaller balances is growing. The "Supply Equality Ratio" (SER) developed by Coin Metrics further confirms this trend: SER divides the cumulative holdings of accounts with balances less than one ten-millionth of the total supply by the cumulative holdings of the top 1% accounts by balance. Since May 2019, Ethereum's SER has risen from 0.03 to 0.055, indicating that supply dispersion has improved during this period.
After the Merge: The Concentration of Staking Supply Becomes the New Battleground
Ethereum core developers are making final preparations for the Merge hard fork, which will switch Ethereum from PoW consensus to PoS consensus, with the direct goal of reducing the network's total power consumption by more than 99%. After the switch is completed, the network will directly support on-chain voting to advance the blockchain and reach consensus, and the distribution structure of ETH will also become the decisive factor in determining "which users are eligible to participate in block production and earn rewards." At that point, block production and validation work will no longer be undertaken by miners, but by validators staking in units of 32 ETH.
Therefore, the decentralization of supply—especially the decentralization of staking supply—will be related to Ethereum's censorship resistance and security in the long term. But from the early staking distribution, the concentration problem has already emerged: Ethereum's PoS protocol Gasper was intended to encourage individual validator node operators to stake ETH in a decentralized manner, but the actual result is that the vast majority of staked ETH is held by third-party staking service providers such as Lido, Coinbase, and Kraken. Early analysis shows that the liquid staking protocol Lido occupies a considerably high share.
DVT and Multiple Paths: How to Avoid Seven Years of Achievements Regressing After the Merge
To ensure that the degree of decentralization accumulated over the past seven years does not degrade after the Merge, the industry is advancing multiple solutions, including achieving staked ETH diversification through smart contract migration, introducing more competition, self-limiting rates, and distributed validator technology (DVT).
In the traditional model, staking service providers usually delegate each 32 ETH validator quota to a single node operator; once that node experiences a technical failure, the delegated staking assets face slashing. DVT splits the keys required to run a validator across multiple nodes, so that technical failure risk is shared among multiple nodes, thereby enhancing the resilience of Ethereum's staking infrastructure and also improving the distribution of staked ETH. Lido, together with core developers and other staking protocols, is actively researching new technologies to support the diversification of staked ETH in a permissionless manner.
Although Ethereum allocated a considerable proportion of its supply to contributors and insiders at launch, over the past seven years, selling by original holders and PoW's distribution mechanism have jointly diluted the holdings controlled by whales and early investors, causing the network's supply structure to continue moving toward dispersion. After the Merge, staking supply will become the core variable determining who can obtain new issuance and who can exert influence over block production and consensus solely through capital. Considering that decentralization is precisely the fundamental characteristic that distinguishes Ethereum from other layer-1 protocols, maintaining and continuously improving supply distribution is directly related to ETH's intrinsic value and the network's long-term prospects.
