Over $4.6B Worth Of Ethereum Burned Since EIP-1559

Ethereum’s price has risen in the last week. Today, only the crypto market saw a rise of 3.51% in the price of ETH. It was moving around between $1,591 and $1,656. Ethereum’s trade volume increased by 65.94 per cent. Plus, the trading volume of ETH was $10.65 billion.

Quick Take:

  • EIP-1559 destroys a portion of all Ethereum transactions, including NFT trades, yield strategy, and simple token transfers. 
  • This burn mechanism disrupts more ETH than miners receive. Supply growth is -1.06% since EIP 1559.

As part of EIP-1559, issued in August 2021, the protocol began burning ETH quickly with increased network activity. According to EIP-1559, protocol burns a portion of all Ethereum transactions, including yield strategies, NFT trades, and basic token transfers. 

What impact does EIP-1559 have?

The protocol has withdrawn 2.8 million ETH at today’s rate, from circulation, since the introduction of EIP-1559. According to Ultrasound Money, the Ethereum protocol has burned more than 16,364 ETH in the past week at a rate of 1.62 ETH per minute.

The whole burning process causes more ETH to burn than is supplied to miners. Since EIP-1559, the annual supply increase of ETH has been -1.06%. As a result, Ethereum is more deflating than Bitcoin, the first sound cryptocurrency.

The figure below shows how the number of tokens in the network has evolved at various checkpoints and upgrades. The section with the dots indicates that the downward pricing trend will continue over the following two years.

The only thing that might stop the fast pace of burning is a significant decline in ETH’s use and adoption. Mostly every network transaction consumes ETH. DeFi and NFT activities have kept Ethereum afloat over the last week. This week, the Ethereum community lost 8,000 ETH due to these two categories. 

Related Content: The Ethereum Merge Is Complete! What’s Next?

USDT transactions used 705 ETH this week, while USDC transfers utilized just 228 ETH. In other words, USDT is still the most preferred and popular stablecoin on Ethereum. As network activity increases, the Ethereum community will see more ETH burned with EIP-1559.

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