Thanks to the implementation of Ethereum Improvement Proposal (EIP) 1559 in early August 2021, over 1 million ETH worth about $4 billion have now been burned on the Ethereum blockchain.
After the implementation, the miners’ fee that was previously used to reward miners for moving transactions was changed to a base fee. Now, miners can only be rewarded at users’ discretion via a tip, while the base fee is burned continuously.
With an increased number of transactions on the Ethereum network on a daily basis, more coins are getting burned, which increasingly makes Ethereum a deflationary asset with more coins burned than distributed.
The Ethereum network has spent just three months burning relatively $4 billion worth of ETH. Thanks to the non-fungible token (NFT) and decentralized finance (DeFi) industries, the burn rate on the network has been steadily increasing, which led to the recent milestone.
Ethereum (ETH) Supply on Exchanges Falling
Over the past few months, especially, since the burning started, Ethereum (ETH) supply on crypto exchanges has been consistently falling. This suggests that the digital asset’s price could see more positive price action in the coming months.
Lark Davis, a popular crypto investor, shared this notable development a few days ago on his Twitter handle.
He wrote, “Ethereum supply on exchanges just keeps falling, $10,000 will come a lot quicker than most people expect!!!”
— Lark Davis (@TheCryptoLark) November 20, 2021
How the market reacts
While, in general, the market has positively reacted to the implementation of a burning mechanism that resulted in 74% growth from 1st October to 9th November. After reaching the most recent all-time high, Ethereum has dipped by 11% due to the global crypto market correction.
In the last week, Ethereum’s price has been ranging from approximately $4,100 to $4,200 in correlation with other major cryptocurrencies, moving with lower volatility compared to the previous week.