Ethereum’s Deflationary Strategy: Burning 3.46M Ether to Reduce Circulation
Summary
Since the London hard fork and the implementation of EIP-1559, over 3.46 million ether has been burned, amounting to approximately $6.68 billion at the current exchange rate. The majority of the burned ether comes from regular transfers, NFT transactions on Opensea, and Uniswap transactions. The deflationary strategy of Ethereum aims to gradually reduce the total amount of ETH in circulation.
Introduction
It has been almost two years since the London hard fork, which introduced EIP-1559 to the Ethereum network. This update resulted in the constant consumption of the base fee component of transaction fees. As a result, more than 3.46 million ether has been burned, equivalent to $6.68 billion. On average, approximately 146,000 ether is destroyed each month since the implementation of EIP-1559.
Main Points
- Regular ETH transfers accounted for the majority of the burned ether, totaling almost 300,000 ETH.
- Opensea NFT transactions burned over 230,000 ether.
- Uniswap v2 burned around 200,000 ether.
- Tether transactions resulted in the burning of more than 150,000 ETH.
- Uniswap versions 3 and 1 burned over 200,000 ETH.
- The Ethereum network currently has $232.53 billion worth of ETH distributed across 120,201,621 accounts.
- Since the implementation of EIP-1559, a little over 3 million ether has been created.
- If the Ethereum network had stuck to a Proof-of-Work approach and did not apply EIP-1559, it would have produced 6.5 million additional ether.
Conclusion
The implementation of EIP-1559 and the deflationary strategy of Ethereum have resulted in the burning of over 3.46 million ether, reducing the total amount of ETH in circulation. Various sources contribute to the burned ether, including regular transfers, NFT transactions, and Uniswap activity. The Ethereum network continues to evolve, transitioning from Proof-of-Work to Proof-of-Stake, and the effects of these changes on the cryptocurrency market are becoming increasingly significant.
