According to The Block, the daily ETH destruction of the Ethereum network has dropped to the lowest level in recent years.
Currently gas fees are between 1 gwei and 2 gwei, which affects the issuance of ETH.
Only 210 ETH was destroyed on Saturday, while net ETH issuance was over 2,000 ETH due to lower gas fees.
Daily ETH burns on the Ethereum network have dropped to their lowest levels this year, with base fees hovering between 1 and 2 gwei at the time of writing.
The decline in base gas fees represents one of the lowest levels observed in recent years, which has also had a corresponding impact on ETH issuance.
Only 210 ETH were destroyed on Saturday, a new low for the year, as gas fees remained low. In contrast, on August 5, when gas fees were around 100 gwei, daily destruction surged to 5,000 ETH.
With gas fees so low, the network’s inflation rate has increased. On Saturday, while 210 ETH were destroyed, net ETH issuance was reported at over 2,100 ETH, according to data from The Block.
Given this inflationary trend, Gnosis founder Martin Köppelmann suggested temporarily increasing the gas limit. "Base fees reached a multi-year low of about 0.8 GWEI. 23.9 GWEI is needed to offset staking rewards. In my opinion, Ethereum needs to increase L1 activity again, and even if it sounds counterintuitive at such low fees, raising the gas limit could be part of a strategy."
The London Hard Fork (also known as EIP-1559) implemented in August 2021 introduced a base fee that is destroyed and a priority fee for validators. Since the base fee is directly related to network activity, higher fees will cause more ETH to be destroyed, thereby reducing supply.
The drop in gas fees is attributed to increased user migration to Layer 2 scaling solutions and the adoption of blob transactions introduced by the Dencun upgrade in March, which helped reduce costs on the Layer 2 network.
ETH is currently trading at $2,540, up nearly 10% year-to-date, with a market cap of $305 billion, according to The Block’s price page.
