Ethereum
Ethereum Witnesses Significant Drop in Daily ETH Burn
Ethereum Witnesses Significant Drop in Daily ETH Burn
THE Ethereum the network has experimented a notable drop in the daily amount of ETH burned, reaching its lowest level this year. This allowed less ETH to be burned. On Sunday, only 610 ETH was burned, setting a record high for this year, as Ethereum’s gas fees remain minimal. In contrast, during the first four months of the year, the daily amount of ETH burned remained consistently above 2,500-3,000 ETH.
The continued decline in gas prices can be attributed to several factors. First, activity has shifted toward Layer 2 scaling solutions, which offer improved scalability and lower transaction costs. Additionally, the adoption of blob transactions, introduced with the Dencun upgrade in March, has helped reduce transaction costs on Layer 2 solutions.
The London hard fork, also known as EIP-1559, implemented in August 2021, brought about a fundamental change in Ethereum’s pricing structure. This upgrade introduced base fees that are burned and priority fees that serve as tips for validators. The relationship between gas fees and ETH burning is closely watched as a critical aspect of Ethereum’s business model. Although lower fees are beneficial to network users, the decrease in ETH consumption has implications for the deflationary nature of Ethereum.
In recent weeks, Ethereum supply has become inflationary, with a growth rate of 0.49%, according to ultrason.money. However, if activity picks up and more ETH is burned than is issued, Ethereum could return to a deflationary state, where supply decreases over time.