According to Nomics statistics, approximately $100 million of ETH has been destroyed or removed from circulation since the hard fork, fueling a price surge from $2,725 to $3,230.
Last Thursday, Ethereum’s London hard fork, a long-awaited network upgrade that included a measure to limit ETH supply growth, went live.
The London upgrade included five code modifications, the most talked about of which was EIP-1559. The “Ethereum Improvement Proposal” revised the network’s transaction fee structure. Instead than going directly to the miners who process and validate transactions, a basic fee would go to the network and then be destroyed.
While EIP-1559 was intended to improve user experience by automating transaction prices and removing the guesswork from an opaque auction process, it has primarily had the effect of increasing demand by lowering supply.
Unlike Bitcoin, which has a supply restriction of 21 million BTC, Ethereum has no such limit. Then, EIP-1559 introduces deflationary pressure. With each new block of transactions added to the chain, additional ETH is generated and distributed as a reward to miners, but some ETH is lost due to fees.
Around 31,000 ETH has already been destroyed, according to the website ultrasound.money. At current exchange rates, that’s little more than $100 million—though it’s unclear how much ETH would be worth if those assets hadn’t been destroyed.
Transactions on the NFT marketplace OpenSea, where individuals may sell or bid on digital items and art, accounted for more than 10% of the burned fees. In terms of burn rate, Uniswap, a decentralised exchange, and Axie Infinity, a blockchain-based game, rank second and third, respectively.
Those who enjoy the sensation of burning will likely welcome Ethereum’s impending transition from a proof-of-work consensus method to a minerless, proof-of-stake network. Because of the structure of Ethereum 2.0, the overall quantity of ETH may potentially decline as more fees are burned than are created.