Ethereum, the second-largest cryptocurrency by market value, has burned over 3.4 million ETH worth over $6.5 billion since the release of the London Hard Fork. To put the magnitude of the burned Ethereum into perspective, it is equivalent to buying 19,085 detached houses in the United States, each priced at an average of $350,000.
146,000 Ethereum Burned Every Month
Based on current values, approximately 146,000 ETH is burned on the Ethereum blockchain every month. Burning ETH helps reduce the circulating token supply, which is essential for the functioning of the blockchain. The London Hard Fork incorporates the implementation of Ethereum Improvement Proposal 1559 (EIP-1529), which changes the way the network operates. With this implementation, users pay a base fee instead of participating in an auction system when paying transaction fees.
They also have the option to tip miners for faster transaction processing. Prior to the London Hard Fork, miners could artificially congest the blockchain to keep transaction fees high and maximize their earnings. With this update, transactions are performed with a base fee, and the burned Ethereum is permanently removed from circulation. The commission fee (Gas Fee) increases when there is high demand and decreases when there is low demand.
Ethereum Supply Decreases with the Merge!
The primary reason for the decrease in supply on the Ethereum network is regular ETH transfers. Approximately 300,000 ETH has been burned for transaction fees. Following that, 230,000 ETH was burned for NFT trading and transfer operations on Opensea, while 200,000 ETH was burned for the buying and selling of Ethereum-based tokens on Uniswap.
In September of last year, the Ethereum network transitioned from the Proof-of-Work consensus mechanism to the Proof-of-Stake consensus mechanism with the Ethereum Merge. This transition resulted in a decrease in Ethereum supply. If the Merge had not occurred, the Ethereum network would have produced an additional 6.5 million Ethereum by now. However, the current rate of Ethereum supply is decreasing by approximately 0.1% per year. If the Merge had not taken place, the cryptocurrency’s supply would have increased by approximately 3.3% annually.
