In a tweet on Twitter on Wednesday, the research firm CryptoRank reported that more than 1 million Ether (ETH) (worth $ 4.24 billion) has been burned as part of London’s hardfork since the introduction of EIP-1559 in August. The EIP-1559 protocol revised the Ethereum fee market by changing the gas tax limit and introducing a burn function that removed some transaction fees from the blockchain and eliminated them forever.
Notable decentralized token burning applications include the popular non-financial tokens, or NFTs, the OpenSea.io platform and the game Axie Infinity designed to play and make money. Thereafter, the volume of transactions from decentralized exchanges such as Uniswap, 1 inch and Sushiswap accounted for the bulk of ETH expenses. ETH is also burned during transfers from stack coins such as Tether (USDT) and USD Coin (USDC), which are built on the Ethereum blockchain. Finally, MetaMask wallet users and those performing regular ETH transactions also contributed to the network activity.
According to Ultra Sound Money, 7.67 ETH is burned every minute, and up to 11042 ETH is burned every day. At today’s speed, around 4 million ETH are burned annually. However, the blockchain currently allocates around 5.4 million ETH annually. Thus, the Ethereum network remains inflationary in terms of net worth.
All of this will change next year when the Ethereum 2.0 update is released, which will move the network from a Proof of Work consensus to a Proof-of-Stake consensus, where effort rewards will be significantly lower than mining rewards. As a result, blockchain emissions will reduce much less than the combustion rate, thus creating a shrinking ecosystem. Ultra Sound Money expects ETH supply to reach 119.7 million in early 2022 before declining.