The Ethereum network, as part of the Ethereum Improvement Proposal (EIP) 1559, has been burning ETH at a massive rate. A portion of the Ethereum transactions – every NFT trade, simple token transfers and yield strategy – are being destroyed.
A total of 2.8 million ETH worth $4.6 billion, since EIP-1559 was implement, has been removed from circulation. The Ethereum protocol has destroyed more than 16,364 ETH in the last seven days. Ultrasound Money has estimated the rate as 1.62 ETH per minute. The burn mechanism shows that more ETH is being destroyed that being issued to the miners. As such, supply growth dropped to -1.06% per year since EIP 1559. This has made Ethereum more deflationary than Bitcoin.
Moreover, Ethereum’s token supply has changed over various checkpoints and upgrades. This suggests that the deflationary trend is likely to continue over the next few years. But this wouldn’t be fulfilled if ETH adoption and usage falls. It should be noted that ETH gets burned with every transaction on the network. The burn rate can be used as a measure adoption for the network.
NFT and DeFi activity have been driving Ethereum’s flame. They have destroyed almost 8,000 ETH with the market leaders being OpenSea and Uniswap.It gives more of an insight into the stablecoin battle between USDT and USDC. USDT’s market cap is way ahead of USDC. Tether’s offering is also responsible for Ethereum being burned.