According to the Watch the Burn platform, more than 2 million ethers, currently valued at $6.000 billion, have been burned since the implementation of EIP-1559 on Ethereum last August.
Ethereum (ETH) has decreased its annual token issuance by 63% with the introduction of a burning mechanism that the network began implementing in August 2021 with the arrival of EIP-1559 in the London update. Since then, more than 2 million ethers have been burned on Ethereum, worth more than $6.000 billion at the time of writing.
Ethereum developers implemented token burning as a mechanism to completely transform the network's gas fee system, seeking greater stability for transaction fee costs and greater consistency in miner rewards.
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Burning tokens on Ethereum
According to data from Watch the Burn, the ETH burned on the network since EIP-1559 has almost doubled the issuance. Currently, according to the platform, a total of 2.001.571 ETH have been burned in the last 7 months, while the issuance has been 1.070.801 ETH in the same period.
Source: Watch the Burn
Daily data shows that the issuance of new ether in the last month has been higher than the amount of ETH burned, due to a decrease in activity within the network.
Opensea and Uniswap, the largest ether burners
The decentralized applications (DApps) and protocols that have the most use within the network and, therefore, those that have generated the greatest gas expenditure and burning of ETH, are Opensea, Uniswap V2 and V3 and MetaMask. Transactions made in Ethereum (ETH) and Tether (USDT) have also burned a significant amount of ether on the network since EIP-1559.
Samuel Haig, journalist for The Defiant, said In mid-January the fever NFT made the Opensea market the largest ether burner on the network, followed by Uniswap, the most widely used DEX and AMM within the decentralized finance ecosystem (DeFi). However, the level of activity within these protocols and on the Ethereum network has decreased in the last two months and, with it, the burning of ETH. The average number of ethers burned per day is currently 2.500 ETH.
What is token burning?
Burning tokens on a blockchain network means destroying them or sending them to an address where they will remain inaccessible forever, with the aim of removing them from circulation.
In addition to Ethereum, there are other blockchains that implement token burning, such as Avalanche and Terra. Cryptoassets like Shiba Inu, which works on the Ethereum network, also will include a token burning mechanism in their protocols in order to reduce their maximum supply.
ETH deflated with token burning
Although the burning of cryptocurrencies may be seen as a disadvantage for some, this mechanism hides a greater benefit and that is the control of the inflation of an asset. Token burning is a deflationary measure that is used with the vision of generating scarcity so that cryptocurrencies increase in value in the future.
In the case of Ethereum, there is still a long way to go for the cryptocurrency to have a true deflationary trend. In some days since token burning was implemented on the network, Ethereum has seen negative issuance; That is, the amount of ethers burned has been higher than the amount issued to reward the miners. The largest so far occurred on January 10, with a negative issuance of more than 5.900 ETH.
The number of ethers in circulation currently exceeds 120 million units. At the time of writing, ETH is trading on the market with a value of $3.010 per unit, with a total capitalization of 354.000 million dollars. Haig commented that the proximity of the merger between Ethereum and Ethereum 2.0, called The Merge, is reigniting bullish sentiment in the cryptocurrency. Since last week, when the merger was executed on the Kiln testnet, ETH has risen in value by over 15%.
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