A lot of Ethereum (ETH) has been burned since the start of EIP-1559, but the supply of the largest altcoin is still increasing at about 1.2% per year.
In a Twitter post published on Wednesday, blockchain research firm CryptoRank revealed that more than 1 million Ether had been burned since the implementation of the EIP-1559 protocol. This protocol was introduced in August as part of the London hard fork. The burned Ether is worth $4.24 billion. The EIP-1559 protocol reshaped the Ethereum fee market. In addition, the introduction changed the limit for gas tariffs and introduced a burn function. This feature takes some of the transaction costs out of the blockchain.
Decentralized applications responsible for token burning include popular non-fungible tokens or NFTs, platform OpenSea.io and the play-to-earn NFT game Axie Infinity. The transaction volume of decentralized exchanges such as Uniswap, 1inch and Sushiswap was responsible for much of the ETH burnings. ETH is also burned during transfers of stablecoins such as Tether (USDT) and USD Coin (USDC) built on the Ethereum blockchain. Finally, wallet users on MetaMask and those who did regular ETH transactions also contributed to network activity.
According to data from Ultra Sound Money, 7.67 ETH is burned every minute. In addition, up to 11,042 ETH is burned every day. At the current rate, about 4 million ETH is burned every year. The blockchain currently creates about 5.4 million ETH per year. That is why the Ethereum network is still growing.
Ethereum 2.0 Upgrade
That’s all going to change next year when the Ethereum 2.0 upgrade goes live. This converts the network from a proof-of-work consensus to that of a proof-of-stake. The strike rewards will be much lower than the mining rewards.
As a result, it would push the blockchain issuance rate far below its burn rate, creating a deflationary ecosystem. Ultra Sound Money predicts that the supply of ETH will reach 119.7 million in early 2022 before declining.