Ethereum (ETH) Exchange Supply Sinks to Record Low at 3.49% of Total Supply

Exchange Reserves Sink to 3.49%

Exchange reserves of Ethereum (ETH) have collapsed to just 3.49% of total supply, the thinnest level on record, and the decline has continued even as price action cooled. On-chain exchange-balance data shows 1.16% of the entire ETH supply left the venues tracked in the dataset since June 1, 2026 — a steady drain that shrinks the pool of coins available for immediate buy or sell orders. A falling reserve does not guarantee higher prices, however, because coins that leave platforms can move into long-term self-custody, into staking contracts that secure the network for rewards, or into decentralized finance protocols.

Both channels are active. Roughly 35% of all ETH is now estimated to be staked, while assets locked across DeFi total about $53 billion. Corporate treasuries have reinforced the trend: Bitmine (BMNR) disclosed earlier this month that it had staked more than 5 million ETH, joining long-term holders whose self-custody moves keep thinning the reserves — much of the ETH that once sat on the best crypto exchanges awaiting execution is now committed elsewhere on-chain.

Usage data points the opposite way to the price. Over the past month ETH rallied from roughly $1,900 to $2,800 before easing back to around $2,660, yet during the pullback gas usage still rose 0.26% to 217.1 billion units, and daily priority fees — the tips users pay to have transactions included in blocks sooner — jumped 26.74% to about $464,000. Block production barely budged at roughly 7,147 blocks, indicating the fee surge came from competition for existing block space rather than added capacity. Our reading of the flow: demand for gas fees across the Ethereum network held firm through the correction, and analysts who track the asset's return to its long-term regression band caution that exchange supply, network usage and price must each be read independently before calling a direction.

Payy Bridge Drained of 1.83M USDC

The same migration has a darker edge. Payy Network, a privacy-focused stablecoin payments provider, confirmed that its bridge contract on Ethereum was attacked at 04:21 UTC on September 24, 2026, and that the contract's entire balance was drained. On-chain records place the exploit at block 26,044,909, where the transaction linked to the attack invoked verifyRollup, the function through which rollup state updates — the mechanism Layer 2 systems use to settle to Ethereum — are validated. A total of 1,832,149.4681 USDC left the contract; 1,828,589.3781 USDC of that went to a single address, with the remainder split across smaller transfers. The transaction completed successfully and was not reverted.

Payy's official statement confirms the company halted deposits, withdrawals, transfers and card payments after the incident, opened a security investigation, and shared attacker-linked addresses with law enforcement, crypto exchanges and blockchain analytics firms, while Payy Wallet functions stay suspended pending review. The company also said the drained assets relate to non-custodial funds that users had deposited to Payy Network and Payy Wallet, and that efforts to recover them are ongoing.

What remains undisclosed matters as much as what is confirmed. No technical root cause has been officially released: the on-chain trace of verifyRollup does not by itself locate the flaw, and a compromised key, an authorization defect or a bug in the smart contract code all remain live possibilities until the team publishes its incident report. The episode lands weeks after Bitget's $351.6M hot wallet breach touched Ethereum and stablecoins, underlining that custody layers and bridges — the very structures absorbing ETH leaving exchanges — remain the sector's most attractive attack surface. Users of the affected payment rails had no card spending or transfer functionality during the freeze, a reminder that a single contract failure can switch off an entire payments stack. Ethereum itself was unaffected; the damage stayed at the application layer. Readers tracking the market in real time can follow live spot and futures prices on Bitget.

Supply Migration Sharpens Bridge Risk

Read together, the two stories describe one structural shift: ETH is moving out of exchange books and into staking contracts, DeFi protocols and rollup bridges, thinning immediate sell-side liquidity while concentrating value in the code that holds it. On-chain evidence in the Payy case is unambiguous about the outflow — 1.83 million USDC in block 26,044,909 — but silent on cause, and remediation so far amounts to suspension and law-enforcement coordination rather than a disclosed fix. COINOTAG's view: until a post-mortem settles whether keys, permissions or code failed, every bridge holding migrated ETH stays the weakest link in an otherwise deepening on-chain supply story.