Since the activation of Ethereum Improvement Proposal (EIP)-1559 on August 5, 2021, more than 4.5 million ether (ETH) has been burned on the Ethereum network. This significant amount of ETH, which equates to over $15.3 billion based on current exchange rates, has been permanently destroyed. This marks a key milestone in Ethereum’s journey, as EIP-1559 aims to reduce the circulating supply of ether by burning a portion of transaction fees.
Transactions on Ethereum have been the primary driver of these burns, with onchain transfers accounting for a large portion of the destroyed ETH. Additionally, platforms like Opensea, a popular NFT marketplace, have also contributed significantly to the burned ether. Since the implementation of EIP-1559, Opensea has been the second-largest source of burned ETH, with NFT minting activities leading to the destruction of over 230,000 ETH.
Despite the large amount of ETH that has been burned, Ethereum’s inflation rate remains relatively low at 0.820%. This indicates that the network is not deflationary as some may have anticipated. The burning mechanism of EIP-1559 operates in a unique way by automatically removing the base fee, a portion of the transaction fee, from circulation. This process occurs directly within the protocol, ensuring that the base fee is irretrievably deleted via code.
Notable contributors to the ETH burn include decentralized exchange (dex) platform Uniswap, which has eliminated over 225,000 ETH, as well as tether (USDT) transactions on the Ethereum network, which have led to the destruction of over 200,000 ETH. These platforms and activities play a crucial role in reducing the circulating supply of ether and driving the deflationary aspect of EIP-1559.
Overall, the Great Ethereum Burn highlights the impact of EIP-1559 on the Ethereum network and the growing importance of transaction fees in reducing the circulating supply of ether. As the network continues to evolve and adapt, it will be interesting to see how this burning mechanism affects the overall supply of ETH and the network’s inflation rate. With over 4.5 million ETH already burned, Ethereum is making significant strides towards achieving its goals of improving efficiency and sustainability.
