What happened: In a recent Ethereum transaction, a sizable amount of Ether was burned. More specifically, 7,840.82 Ether was removed from circulation, amounting to a value of $14,308,407 based on the current value of Ethereum ($1,824.86).
Why it matters: This burn was a result of a significant upgrade that the Ethereum blockchain underwent earlier this month called EIP-1159. This upgrade changed the fee structure of Ethereum transactions to include a base fee that adjusts according to the demand for block space. The base fee is permanently removed from circulation upon use, reducing the supply of Ether and potentially having an impact on its future value.
See Also: How to Buy Ethereum & When Will Ethereum 2.0 Launch
This burn is part of a larger trend where Ethereum is expected to become a deflationary currency as the issuance rate of new Ether decreases. Currently, Ether is issued at a rate of 4% per year, though this is projected to decrease to 0.5-1% with the upcoming Ethereum 2.0 upgrade. This could lead to the burn rate of Ether exceeding the token’s issuance rate, resulting in a decrease in its overall supply.
According to Glassnode data, the net annualized issuance rate for Ether was -11.91% yesterday, indicating a decrease in overall supply.