On Wednesday, 9,251.71 Ether (ETH/USD) with a current market value of $16,681,118 was burned from Ethereum transactions. This process is called burning. It involves sending a coin or token to an unusable wallet to remove it from circulation.
The Ethereum blockchain implemented an important upgrade, EIP-1159 on August 5th, 2021. This Ethereum improvement proposal is significant as it has drastically changed the fee model. Each transaction now includes a variable base fee that adjusts according to the current demand for block space. This base fee is burned, or permanently removed from circulation, reducing the supply of Ether forever.
Ethereum currently issues new Ether at a rate of 4% per year, but this is expected to decrease to around 0.5% – 1% in the Ethereum 2.0 upgrade. This will lead to Ether’s burn rate being higher than the token’s issuance, making ETH deflationary.
According to Glassnode, the net annualized issuance rate for Ether was -14.80% yesterday. This suggests an increase in the burn rate of Ether, which can make ETH an even more deflationary currency in the future.
