The Ethereum (ETH) burn was implemented with the EIP-1559 and since then, thousands of ETH have been burned and taken out of circulation. The ETH burn continues in a bid to make the cryptocurrency deflationary, and it has actually been able to achieve this in some blocks. Given the number of ETH that is being burned by the hour, here is how much ETH is expected to be burned each year.
ETH Burn Rate Higher Than Issuance
With each block, ETH is being put into circulation and at the current issuance rate, there is an estimated 603,000 ETH being put into circulation each year. Before the burn was implemented, this would increase the number of ETH in circulation, but not anymore.
The Ethereum burn has grown over the last couple of months and there is an expected 835,000 ETH expected to be burned each year. This is significantly more ETH than is being put into circulation. So for the first time since the network was launched, there will be more coins being taken out of circulation than those being put into it.
ETH price clears $1,300 | Source: ETHUSD on TradingView.com
The rate of issuance has also gotten much lower since the network moved from a proof of work to a proof of stake mechanism. Previously, there would be more than 4 million tokens being issued each year and the move to proof of stake has cut it down by more than 60%.
Rivaling The Best
One of the problems that have plagued Ethereum has been the number of new tokens that were being put into circulation this year. Back when the network was still using proof of work, new tokens were being introduced at a rate of 3.66% each year. This was very high compared to BTC’s issuance rate which sat at 1.72%. However, moving to proof of stake has proven to be a game changer.
Following the upgrade, the ETH issuance rate has declined significantly. It now sees new tokens being introduced at a rate of 0.07% each year, significantly lesser than that of Bitcoin, which remains its largest competitor.
ETH issuance falls below BTC | Source: Ultrasound Money
The Merge was completed 29 days ago, and if the network was still on proof of work, there would have been a total of 353k ETH put into circulation in this time period. But with the change in mechanism, only about 7k ETH has been added.
ETH staking has also grown during this time, with more than 14.3 million coins currently staked on the network. A total of 2,66 million ETH has now been burned since EIP-1559 was implemented. ETH transfers take the lead for the most burned, while OpenSea is a close second for NFT transactions.
Featured image from Bloomberg, chart from TradingView.com
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