Over the past 24 hours, more Ethers (ETH) have been burned than new units created. This disinflationary event is a first for the Ethereum blockchain since the implementation of EIP-1559.
A disinflationary event on Ethereum
The implementation of the much-anticipated EIP-1559 debuted the “burn” mechanism, which aims to better manage transaction fees on the network. The “London” update introduced “base fees” for transactions, which are automatically adjusted based on congestion on the network. This also automatically burns off a portion of the fees generated with each transaction. In the medium term, this limits ETH inflation.
In the last 24 hours, more Ethers (ETH) have been burned on the network than new units created, which means that there are fewer ETH available than the day before.
Over the period covering Thursday to Friday, ETH supply growth turned negative. More ETH were burned than the 13,200 ETH issued by miners. This can happen when base fees adjust upward during periods of high demand.
DeFi Pulse co-founder Scott Lewis and Week in Ethereum News founder Evan Van Ness believe this is the first case of deflation on the Ethereum network.
Already $637 million worth of ETH burned
Since the network update, 192,654 ETH have been burned, or about $637 million. During the 30 days, that’s about 4.47 ETH that went up in smoke every minute.
Not surprisingly, it is the area of non-fungible tokens (NFTs) that represents the largest number of ETH burned. According to Ultrasound.money, the OpenSea marketplace accounts for the largest burns, followed by network transactions.
Since the implementation of EIP-1559, Ether has risen from $2,516 on August 4 to $3,926 today, a 56 percent increase in one month.