Since the launch of Ethereum’s EIP-1559 proposal in August 2021, the network is ‘burning’ (permanently removing from supply) ETH at an unprecedented rate. As per the EIP-1559 proposal, a portion of ETH on each transaction is destroyed – from NFT trades, currency transfers, and transaction fees – ETH is burnt at every turn.
The EIP-1559’s implementation also ensures that there’s more ETH being destroyed by the network than created by miners. The total amount of ETH created has dropped to -1.06%/year – making ETH more deflationary than Bitcoin, which is noted as the ‘gold standard’ and ‘original sound money’ of cryptos.
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As of now, a total of 2.8 million ETH has been burnt – an amount equalling $4.6 billion at today’s prices. In the past week alone, Ethereum has destroyed more than 16,000 ETH at 1.62 ETH/minute, according to data from Ultrasound Money.
The chart below shows how ETH’s total supply has changed before and after the implementation of EIP-1559. The dotted portion suggests that the deflationary trend is expected to continue for the next two years – unless Ethereum usage drops off significantly. Experts suggest that we can use burnt rate charts as a unit of measurement for the adoption of the Ethereum network.