Ethereum has burned over 50% of all ETH issued since merging its proof-of-work layer with the proof-of-stake Beacon Chain, a process known as “The Merge.” According to data from Ultra Sound Money on August 7, the network has burned more than 3.5 million ETH out of the total 6.5 million ETH issued.
This burning has resulted in a decrease in the supply of ETH by approximately 0.98% annually. In other words, the circulating supply of ETH is shrinking over time as the network actively burns coins. This trend indicates that Ethereum is gradually becoming slightly deflationary.
The ultimate goal for Ethereum is to have the coin burning rate exceed the issuance rate, effectively transforming ETH into a deflationary asset. This concept, often referred to as “ultrasound money,” is favored by many Ethereum enthusiasts. While Ethereum hasn’t fully achieved this ideal yet, it has made progress since the merge and the integration of a proof-of-stake consensus system on September 14, 2021.
The merge coincided with a bullish cycle in the cryptocurrency market, driving the prices of ETH and other altcoins to historic highs. At its peak in 2021, ETH reached an all-time high price of around $4,900. However, the subsequent cooling of prices in 2022 had a negative impact on decentralized finance (DeFi) and non-fungible token (NFT) trading activities, as indicated by on-chain data.
The burning of ETH primarily stems from ETH transfers, but significant burns also occur due to activities on platforms such as OpenSea, the popular NFT marketplace, and Uniswap, a decentralized exchange on Ethereum. Additionally, transfers of ERC-20 USDT, a stablecoin running on the Ethereum network, contribute to the burning of ETH.
Source: BITCOINST
