Ethereum Network Burns 4.6 Million Ether Since 2021 Upgrade

Over the past 1,438 days, the Ethereum network has permanently removed 4.6 million ether from circulation, resulting in the destruction of approximately $13.57 billion worth of the digital asset. This process, known as "burning," was initiated with the London hard fork upgrade on August 5, 2021. The upgrade introduced a mechanism that burns a portion of transaction fees, thereby reducing the overall supply of ether.

Data from ultrasound.money indicates that since the upgrade, the Ethereum network has burned over 4.6 million ether. This amounts to roughly $13.57 billion in vaporized value, with an average of 2.22 ETH being burned every minute. The majority of this burning is attributed to ETH transactions, which have accounted for 375,959 ETH being burned. Other significant contributors include the NFT marketplace Opensea, which has burned 230,051.12 ETH, and the decentralized exchange Uniswap version 2, which has burned 227,044.95 ETH. Additionally, transactions involving the stablecoin tether (USDT) have resulted in the burning of 210,070.05 ETH.

Despite the significant amount of ETH burned, the Ethereum network remains inflationary, with a median issuance rate of 0.801% since the London hard fork. This rate is nearly in line with Bitcoin's current issuance rate of 0.809%. However, seven-day figures from ultrasound.money show Ethereum's rate dipping to 0.723%, with 16,745.66 ETH newly minted over the past week. Since the London hard fork, 3,695,537 ETH has been minted, adding about $10.89 billion in value to the network. In contrast, over the same period, Bitcoin miners have generated 1,092,150 BTC, translating to $129.92 billion in newly issued coins.

The balance between issuance and burn has been a focal point for analysts as Ethereum's economic model continues to evolve. While the network's monetary policy mechanics are unique, the 0.801% issuance rate is technically inflationary but significantly lower than the 3.394% rate Ethereum would have seen had it stuck with proof-of-work (PoW). The burn mechanism is designed to create deflationary pressure on the ETH supply, which could potentially increase the value of the remaining ETH over time. However, the actual impact on the price of ETH will depend on various factors, including market demand, investor sentiment, and overall economic conditions.

Analysts have noted that the burn rate could accelerate in the future as network usage increases, potentially leading to a more pronounced deflationary effect. The continued growth in the supply of ETH, despite the burn, highlights the complex dynamics within the Ethereum ecosystem. While the burn mechanism aims to create scarcity and potentially drive up the price of ETH, the ongoing issuance of new tokens through mining and staking serves as a counterbalancing force. This interplay between supply and demand will be a key factor in determining the future trajectory of ETH's price and its role within the broader cryptocurrency market.