The second largest cryptocurrency by market capitalization valued at around $ 800,000, Ethereum ($ ETH), is currently burned every hour according to available data. Ethereum Burns began after the network’s London hard fork went live on August 5th.
According to data from the tracking website Watch the Burn, first reported by Benzinga, around 202 ETH, worth $ 818,880 US dollars, are burned every hour. This means that in one day the cryptocurrency 7,642 ETH worth almost $ 31 million will be burned.
Per day, the net issuance of Ethereum is around 5,988 ETH worth over $ 24 million, which means the net supply reduction is around 56.02%. Since the cryptocurrency’s burning mechanism was introduced, $ 4.8 billion worth of ETH has been burned while the total net spending was $ 2.3 billion. The numbers show an overall net reduction in Ethereum supply of 67.46%.
The London hard fork included the implementation of the Ethereum Improvement Proposal (EIP) 1559, which changed the way transaction fees work on the network. Instead of an auction system, users now pay a base fee for miners to process their transaction and, alternatively, can tip so that their transactions are processed faster.
Miners are not paid the basic fee as it could give them an incentive to artificially overload the network in order to keep it high and earn more. Instead, the basic fee is burned, whereby ether is withdrawn from circulation forever. It increases when there is higher demand and decreases when there is less demand.
The supply reduction is helping Ethereum’s rate of inflation fall and could make the cryptocurrency deflationary if the burn rate gets high enough. Investors have been bullish since the upgrade began, with the price of Ethereum hovering from around $ 2,700 on August 5 to around $ 4,000 at the time of writing.
As reported by CryptoGlobe, Singapore-based cryptocurrency-focused hedge fund Three Arrows Capital has apparently invested over $ 84 million in Ethereum after the price fell below $ 4,000 recently.
DISCLAIMER
The views and opinions of the author or any other person mentioned in this article are for informational purposes only and do not constitute financial, investment or other advice. Investing in or trading in crypto assets carries the risk of financial loss.
IMAGE CREDIT
Selected image via Unsplash
Comments are closed.