The Ethereum (ETH) network has seen its first consecutive week of negative supply issuance as bubbling markets drive persistently high transaction fees.
More Than $3 Billion Worth of Ethereum (ETH) Destroyed
Following the highly anticipated London upgrade, which introduced the burn mechanism on the Ethereum fee market in early August, a small amount of Ether (ETH) has since been burned for every transaction carried out on the network since then.
With natural gas prices remaining high, the Ethereum network has experienced deflationary issuance for 7 consecutive days, meaning more ETH is being removed from supply than ETH is created by mining. For Ethereum to continue producing deflationary blocks, the price of gas must always stay above 150 gwei.
EthHub co-founder Anthony Sassano commented that deflationary Ethereum was not expected until “the merge” — when the Ethereum blockchain is set to merge with Ethereum 2.0’s Beacon Chain, which is currently expected to occur during the first half of 2022.
According to data from Ultrasound.Money’s expense burn tracker, around 15,000 ETH ($65 million at current prices) are destroyed every day. Given the speed at which new ETHs are being created, Watch the Burn reports that the net weekly issuance at the time of writing is negative 8,034 ETH (about $34 million).
Since the London upgrade, more than 724,400 ETH worth $3.1 billion have been permanently destroyed.
The average cost of the ERC-20 token transfer is now $46, according to Etherscan. Some more complicated things, like providing liquidity for decentralized financial protocols or exchanging tokens on Uniswap, can cost up to $140 right now.
EIP-1559 Makes Gas Fees More Predictable
Sasano emphasized that the EIP-1559 upgrade did not increase gas prices, but made it more predictable.
“Contrary to popular belief, EIP-1559 has not increased gas prices and has in fact helped considerably with spikes in demand (such as during hyped-up NFT mints) which has led to a smoother network overall.”he said
According to the Bankless Ethereum Q3 network report, the transaction value processed from July to September this year was up to $536.5 billion, an increase of nearly 400% over the same period last year.
Although Ethereum has ushered in its first deflationary week, many Ethereum supporters are trying to encourage users to migrate to take advantage of its emerging layer-two ecosystem.
According to L2beat, the Total Value Lock (TVL) of various layer-two networks hit a record high of $4.68 billion. As Ethereum users increasingly look for ways to avoid these intolerable transaction fees, the TVL has risen nearly 500% in the past two months.