Will Ethereum becoming a deflationary asset reduce participation in its network and reduce decentralization?

Tl;dr is in the title

If Ethereum becomes deflationary, let’s say a century from now 99%of Eth has been burned and only the Eth staked from people running 32 Eth validators remains as the other 1%. Either some validators need to sell their Eth (reducing the number of validators) or no one will be able to buy gas to pay for transactions on Ethereum.

Listening Justin Drakes new Ultra-sound money model, I can’t help but wonder what happens if all the “liquid” money gets burned eventually, outpacing the new eth being created from block rewards. All that remains would be “frozen” eth that’s being staked. If all the existing liquid Eth is burned then obviously some validators would sell their stakes(“thaw” their eth) for high prices. But validators selling their stakes reduces the amount of validators and increases centralization.

Obviously this is a very hypothetical situation but is there some mechanism to counteract this? Something such as Eth inflation will increase the less Ethereum that exists or could it be possible they could reduce the amount of Eth required to stake?