In August 2021, a new “burn” mechanism was introduced on Ethereum during the EIP-1559 update, making it possible to make ETH deflationary. Since then, 2 million Ethers have been taken out of circulation, the equivalent of 5.8 billion dollars.
Over $5.8 billion worth of Ether burned
The EIP-1559 update is one of the biggest on the Ethereum network . As a reminder, it introduces a “burn” mechanism for part of the ETH spent during transaction fees, in a desire to impose a deflationary character on the token .
In theory, the update should notably reduce and stabilize mining and transaction fees . That said, although they are currently at their lowest for more than 6 months , nothing ensures that the EIP-1559 is really there for something.
Above all, this new “burn” mechanism had a major role in reducing the total supply of Ether . In total, more than 2 million ETH has been completely withdrawn from circulation, according to data published on Ultrasound.money . On average, the current rate is around 6 tokens burned per minute , or 100,000 per week.
NFTs dominate the Ethereum network
In particular, OpenSea is responsible for the majority of Ether burns. Indeed, the NFTs purchasing platform is responsible for around 11.5% of the transactions carried out on the Ethereum network . Here is the ranking of the ten biggest contributors:
OpenSea, the first source of Ether token burn
Moreover, the category of non-fungible tokens represents 35% of the tokens burned since the implementation of the update. It is important to note that Uniswap finds itself at the same time in third, fifth and sixth place in this ranking. The v2 and v3 versions of the decentralized exchange (DEX) encompass approximately 11% of ETH burned since the update.
The Ethereum merge is fast approaching
It’s no longer news, Ethereum is working on transitioning from its current Proof-Of-Work (PoW) consensus model to a Proof-Of-Stake (PoS)-like model . Highly anticipated, this “merge” should take place in July of this year.
The Ethereum Foundation has announced the launch of the Kiln testnet , the final step before Ethereum 2.0. This involves merging the Beacon chain with the current mainnet. Currently, the Kiln testnet is the final step before the “merge” to Ethereum 2.0.
This transition should help Ethereum solidify its current status as the majority blockchain in terms of total value locked. Indeed, this “merge” would result in greater scalability and lower transaction fees. It would also help the network reduce its energy consumption to around 1% of the energy it currently consumes.
