NFT and DeFi on the Ethereum network, particularly via OpenSea and Uniswap, are keeping ETH burning.
As part of EIP (Ethereum Improvement Proposal) 1559, which was issued in August 2021, the protocol has been ETH-burning (crypto terminology meaning destroying) at a tremendous pace.
According to EIP-1559, a part of all Ethereum transactions, including NFT trades, yield strategies, and basic token transfers, are deleted. It is everything being burned.
Since the implementation of EIP-1559, a grand total of 2.8 million ETH, or about $4.6 billion at current prices, have been taken from circulation.
Ultrasound Money estimates that the Ethereum protocol has destroyed more than 16,364 ETH at a pace of 1.62 ETH per minute during the last week.
This burning process also results in the destruction of more ETH than is provided to miners. Since EIP 1559, supply growth has decreased to -1.06% each year. This makes Ethereum more deflationary than Bitcoin, the original sound currency.
The only real way this forecast would not be met is if ETH acceptance and use plummets off a cliff. Remember that ETH is burnt with every network transaction.
Consequently, we might utilize this burn rate as an additional metric for measuring network adoption.
This week, these two categories were responsible for the destruction of about 8,000 ETH, with the market leaders in each category—OpenSea (1,298 ETH) and Uniswap V3 —serving as the primary drivers.
This measure provides more insight into the stablecoin competition between USDT and USDC. Tether’s issuance is responsible for more than three times the amount of Ethereum being burnt, despite the fact that the former’s market capitalization is still much larger than the latter’s.
This week, USDT transactions burnt around 705 ETH, whereas USDC transfers burned just 228 ETH. In other words, USDT remains the most widely used stablecoin on Ethereum.
As network activity continues at a rapid rate, the Ethereum community will continue to see the network’s demise.