Ethereum implemented the EIP-1559 in 2021 and since then, ETH has been burned every day. This upgrade has pushed the network towards becoming deflationary, taking more than 30% that would have gone straight into circulation and burning it. Now, only seven months after the upgrade was implemented, the network has reached another milestone of ETH burned in terms of dollar value.
Over $5 Billion In ETH Burned
On August 5th, the EIP-1559 officially went into effect. This came with much fanfare given the implications of such an improvement on the network. It has burned ETH since then and accelerated over the next few months as network activity rose due to the rise of the decentralized finance (DeFi) space. The burn had quickly surpassed $1 billion burned, and now seven months later, there have been over $5 billion worth of ETH burned.
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This comes in light of the recent acceleration recorded over the last six months. In this time frame, the rate at which ETH is being burned is up 559%. The volume burned all comes from fees as the network has seen higher activity in recent times. The burn is important given that it permanently removes all of the burned coins from circulation. This means that since August 2021, more than 1,950,00 ETH have been removed from circulation.
At this accelerated rate, the network is seeing about 80 ETH burned every hour. This translates to more than $200K worth of ETH being burned every hour. The burn over the last seven months has since the net reduction reached as high as 67%.
ETH declines to $2,500 | Source: ETHUSD on TradingView.com
Ethereum planned to have 2.6 million ETH burned in the first year of the implementation and at the current rate, it looks like the network will actually be at this milestone long before August 2022.
Ethereum Heading Towards Consensus Layer
Ethereum’s move to the consensus layer (previously referred to as ETH 2.0) is growing closer by the day. The final merge is expected to take place sometime in the middle of 2022, leaving only a few months until the estimated time of launch. This will put the network on a completely new path, making it more efficient, scalable, and safe for all users of the blockchain.
Ethereum still remains the second-largest cryptocurrency in the space by market cap. It is currently trending around $2,500, a critical support point for the digital asset. Its market cap sits at $311 billion at the time of this writing.
Featured image from CryptoPotato, chart from TradingView.com