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In the Avalanche ecosystem, users managed to reduce the circulating supply of the token by burning 439,000 AVAX worth $16.7 million last week. As with many blockchain ecosystems, all transaction fees in the Avalanche network are incinerated. The transaction fees taken on the network are based on the EIP-1559 design, which introduces a burning mechanism for transaction fees, similar to the Ethereum ecosystem.
A Record Breaking Week for the Avalanche Network
The difference observed between Ethereum and AVAX is that while the Ethereum ecosystem pays a portion of the transaction fee to validators and burns the rest, the Avalanche ecosystem burns both.
The increase in burned transaction fees is noteworthy; while only a few thousand AVAX were burned each week between May 2022 and October 2023, the ecosystem reached a peak in April 2023 with a burn of 39,000 AVAX in one day. At the end of November, there was a burn of 85,000 AVAX, followed by a jump to 40,000 AVAX two weeks later. However, this week’s burn amount has opened the door to a record peak.
This significant increase, which started in the Bitcoin network, seems to be largely due to the spread of the inscriptions hype across Avalanche and other blockchain networks. According to the Dune Analytics data table created by Hildobby, a researcher at VC firm Dragonfly, more than 75% of the transaction fees paid and burned on Avalanche last week were due to transactions related to the inscriptions hype. Users of the Avalanche ecosystem paid $13.8 million in fees for these transactions.
The Inscriptions Craze Continues
Inscription-based tokens are created by writing code into ordinary blockchain transactions and using an off-chain numbering system to track them. They were introduced as a temporary solution on the Bitcoin network due to the lack of native support for tokens.
This hype quickly spread to various other blockchain ecosystems for several reasons. The most significant reason is the low cost of inscription transactions and their revolutionary nature in the blockchain space. To date, a total of 3.4 million AVAX, equivalent to $129 million at current prices, have been burned through transactions on the Avalanche network.
