On Tuesday, a significant amount of Ethereum (ETH) was burned, totaling 3,725.34 ETH worth $6,081,252. This burning process involves sending the coins to an unusable wallet, effectively removing them from circulation. The current value of Ethereum at the time of publication was $1,632.40.
This event is noteworthy due to the implementation of an important upgrade known as EIP-1159 on August 5th, 2021. This upgrade brought about a significant change in the fee model for Ethereum transactions. Under the new model, each transaction includes a variable base fee that adjusts based on the current demand for block space. This base fee is permanently removed from circulation through burning, ultimately reducing the supply of Ether.
Currently, Ethereum is issuing new Ether at a rate of 4% per year. However, with the upcoming Ethereum 2.0 upgrade, this issuance rate is expected to decrease to around 0.5-1%. Many experts believe that the burn rate of Ether will surpass the token’s issuance, potentially transforming ETH into a deflationary currency.
Looking at the net annualized issuance rate for Ether, it was recorded at -2.57% yesterday, further indicating the decrease in supply.
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