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As network activity gains momentum, leading Layer1 network Ethereum (ETH) has witnessed a notable increase in its burning rate last month. The increase in the burning rate, which is a measure of ETH tokens permanently removed from circulation, indicates a growing demand and usage of the Ethereum network.
Supply Balance in ETH
As more users engage with decentralized applications (dApps) on L1 and interact with them, the burning rate contributes to Ethereum’s deflationary supply dynamics. According to Ultrasound.money data, approximately 92,831 ETH worth around 193.55 million were burned in the last 30 days. Despite a general indifference towards non-fungible tokens (NFTs) since the beginning of the year, Ethereum managed to reverse this trend with a significant monthly increase of 37% in sales volume recorded in November.
Furthermore, this represents the first monthly increase in Ethereum’s NFT sales volume since February. According to CryptoSlam data, NFT sales volume reached 273 million dollars in November, with five days left until the end of the month. In relation to the DeFi ecosystem, a significant indicator of growth on the Ethereum network is the rise in the total value locked (TVL) recorded in the last 30 days.
Ethereum Network Activity in ETH
According to DefiLlama data, Ethereum’s TVL was 35.56 billion dollars at the time of the publication of this news, showing a 19% increase last month. Lido Finance (LDO), the leading protocol on the chain, recorded a 21% TVL increase during the mentioned period.
Due to the increase in on-chain activity and gas fees on the Ethereum network, the native token, which used to experience inflation due to low activity, has now become deflationary. The increase in network activity on Ethereum is a significant driving force for deflation as it leads to higher ETH burning rates resulting from increased usage. This reduction in the token’s supply can be beneficial for its price. According to Ultrasound.money data, ETH supply decreased by over 22,000 ETH just last month.
