While the burn rate slows down, miners already burned two million ETH since August
About $5.4 billion worth of ETH has been burned and nearly 2,000 new coins are taken out of circulation every day. The burning mechanism implemented on August 5, 2021 allows for the phasing out of network fees.
According to the chart provided by IntoTheBlock, the number of Ethereum burned on the chain has been progressively increasing with almost no spikes. The fee burning rate was significantly increased during the NFT and DeFi craze when the network was almost constantly congested. In that period, users had no other choice but to pay up to $50 per transaction.
The supply shock
The concept of a supply shock is the main fuel for the second largest cryptocurrency, as most traders and investors were hoping that during the new bullrun the available Ethereum supply would not be able to cover the existing demand.
According to the WatchTheBurn service, during elevated fees periods, Ethereum was constantly facing negative issuance days. Thus, the network was releasing fewer coins into circulation than traders burned in one block.
As the service suggests, transaction fees on the network are now significantly lower than they were before. Traders can move a trade today with only 18 Gwei while the price of the same stock was earlier around 50-60 Gwei.
During the last week, the net issuance totaled 66,914 ETH, or $184 million. The overall reduction of the issuance totaled 67% since Aug. 15.
As for the price of cryptocurrency under the burnout process, investors are yet to see the full effect of the supply shock as Ethereum price has lost over 45% of its value. At press time, the second largest cryptocurrency is trading at $2,716 with a 7% price increase in the past 24 hours.
