Ethereum

Since EIP-1559 Was Implemented, $4.6 Billion Worth of ETH Has Burnt

01/23/2023
Bitcoin Ethereum News
  • EIP-1559 was launched in August 2021. 
  • For every transaction on the network, one ETH is burned. 
  • Making it more deflationary than Bitcoin.

Ethereum still ranks second despite it being used by numerous protocols. This feature was supposed to make it the market reading cryptocurrency, but that did not happen. Now, as a part of the Ethereum Improvement Proposal, better known as EIP-1559, launched in August 2021, ETH is burning at a colossal rate.

How much is Burned?

A considerable portion of Ethereum transactions is destroyed as per EIP-1559. A piece of every NFT trade, simple token transfer, and yield strategy is thrown in the forge. Since its implementation, a total of 2.8 million ETH has been removed from circulation. The burn amounted to nearly $4.6 billion concerning the latest prices. 

According to data, more than 16,364 ETH, at the rate of around 1.62 ETH per minute, has been destroyed in the last seven days alone. 

What does this imply?

Due to this mechanism, more ETH is being burned than being issued by miners. Resultant growth has now dropped to negative 1.06% per year since the implementation of EIP-1559. In turn, this makes Ethereum more deflationary than Bitcoin.

Source: https://ultrasound.money/ 

The chart indicates that the token supply of the network has changed noticeably throughout checkpoints and upgrades. Moreover, the dotted part suggests continuing the deflationary trend for the next two years. 

Although ETH adoption and usage fell drastically, due to any reason, these projections could also fail. It must be considered that with every transaction on the network, one ETH is burned. In a way, this burn rate can also be used to measure the adoption of the network. 

Who is leading ETH adoption?

One genuine question, who is carrying the adoption baton? In the past weeks, NFTs and DeFis have been actively feeding the adoption. These two categories were responsible for nearly 8,000 ETH being buried this week. Market leaders in each of them, like OpenSea, were responsible for 1,298 ETH burnt, and Uniswap V3 for 876 ETH being the forerunner. 

Relation with Stablecoins

There is a long ongoing battle between USDT and USDC. While USDTs market cap is ahead by leaps and bounds compared to USDC, Tether’s offerings are now responsible for nearly three times burnings.

Nearly 705 ETH were burnt for USDT transactions and only 228 ETH for USDC. With data at hand, it can be said that USDC is also playing an important role in Ethereum adoption. 

ETH: Price Analysis

Currently trading at $1,603.43 with a drop of 1.14%, its value against Bitcoin also dropped by 1.87% at 0.07123 BTC. At the same time, its market cap dropped by 1.11% to $199 billion, and its volume dropped by 2.68% to $8.5 billion in the last 24 hours. ETH still holds the market dominance of 19.13%, with its rank at 2. 

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Source: https://www.thecoinrepublic.com/2023/01/22/since-eip-1559-was-implemented-4-6-billion-worth-of-eth-has-burnt/