Ether Burned in Ethereum Increases: Is A Deflationary Currency Born?

Ethereum is one of the most important projects in the cryptocurrency world, and a recent update has brought significant changes that will shape the future of ETH. This update, known as Ethereum Improvement Proposal 1159 (EIP-1159), has fundamentally changed the fee model of the network. In this article, we will learn more about Ethereum's burning process and the future of burning rate. #ether

Ethereum Burning Process:

EIP-1159 was integrated into the Ethereum network on August 5, 2021. This update introduced a variable base fee for each transaction, which adjusts based on the current demand for block space. However, it also brought another significant change: transaction fees are now burned, effectively removed from circulation. The burning process involves sending the transaction fees to an unusable wallet. This process enhances the deflationary feature of the Ethereum network. #Ethereum

Ether Burning and Supply Reduction:

The burning process continuously reduces the Ethereum supply. The amount of Ether burned in each transaction varies depending on demand. The burning amount increases in proportion to the increase in transaction fees. For example, on a Sunday, it was reported that a total of 3,680.57 Ether worth $6,881,195 was burned from Ethereum transactions. This represents a significant amount of Ether being removed from circulation and reducing the supply. #ETH $ETH

Future Ether Burning Rate:

As part of the Ethereum 2.0 update, the annual issuance rate of Ether is expected to decrease to 0.5-1%. When this happens, it is predicted that the burning rate of Ether will exceed the token issuance rate. In other words, as transaction volume and base fees increase on the Ethereum network, more Ether will be burned, leading to further supply reduction. This indicates that Ether will become a deflationary currency. #burn

In Summary:

EIP-1159 update for Ethereum brought a significant milestone by changing the fee model of the network. The burning process reduces the Ether supply continuously, creating a deflationary economy. In the future, with the Ethereum 2.0 update, it is expected that the burning rate of Ether will surpass the token issuance rate. This implies a reduction in Ethereum's supply and potentially an increase in the value of Ether.