1 Million Ethereum Has Been Burned Since London Hard Fork in August
In August the Ethereum network implemented the London hard fork upgrade which included a mechanism (EIP-1559) that changed Ethereum’s fee rate to a new scheme making ETH deflationary. Since then 1 million ETH has been burned, worth approximately $4.3 million.
The second-largest crypto asset in terms of market capitalization, Ethereum (ETH) has an overall valuation today just above $500 billion. Ethereum’s market capitalization represents 18.8% of the $2.7 trillion crypto economy.
Just 3 months ago, on August 5, 2021, the Ethereum blockchain upgraded and added various features to the consensus rules. The most transformative included EIP-1559 and EIP-3554, and EIP-1559 in particular created a new fee rate scheme that allows the network to burn a portion of ether.
EIP-1559’s summary hosted on Github states:
“There is a base fee per gas in protocol, which can move up or down each block according to a formula which is a function of gas used in parent block and gas target (block gas limit divided by elasticity multiplier) of parent block. The algorithm results in the base fee per gas increasing when blocks are above the gas target, and decreasing when blocks are below the gas target. The base fee per gas is burned.”
Since the early August update, the Ethereum network has issued nearly 1.5 million new ETH as rewards to miners. But it has “burned” 1 million ETH collected in fees, resulting in a net issuance of just around half a million, according to data site Watch the Burn. Abetted by a decrease in supply growth, the price of ETH has rocketed from under $3,000 to nearly $4,500 in that timespan, per CoinGecko. The number two cryptocurrency by market capitalization is trading hands at $4,286, at press time.
In comparison, Bitcoin has seen comparable growth without any comparable update, moving from sub-$40,000 territory on August 3 to just under $58,000 today.
But whereas Bitcoin has been able to keep average transaction fees below $5.00 each day over the last three months, average Ethereum fees have been above $10 and regularly ascend past $50 (levied in ETH).
At the time of writing, etherscan.io’s API which shows the circulating ETH supply indicates that there’s 118,472,428 ether in existence today. The biggest ethereum burner today is still the non-fungible token (NFT) marketplace Opensea with 110,081 ether or $398 million burned to date.
The burning stemming from Opensea usage took place across 7,941,975 ethereum transfers. Regular ethereum transfers are tethered to 94,800 ETH burned since the upgrade in August. The decentralized exchange (dex) platform Uniswap V2 (version 2) is the third-largest ethereum burner since the upgrade. 92,239 ether or $373 million worth of ethereum using today’s exchange rates has been burned stemming from Uniswap V2 usage.
The stablecoins tether (USDT) and usd coin (USDC) contribute to a lot of ethereum burning. While tether (USDT) is the fourth largest burner behind Uniswap V2, USDC is the seventh-largest ethereum burner today. Tether across 11,499,787 transfers has attributed to 53,988 ether burned or $210 million. USDC has contributed to the burning of 20,042 ether today or $77 million. Other applications like Metamask, 1inch, Sushiswap, and Axie Infinity also contribute to a lot of ether burning.
