66,000 ETH destroyed in total, making the cryptocurrency way more scarce
In 2023, the total amount of destroyed Ethereum (ETH) coins has reached a staggering 66,000 ETH, worth approximately $117 million at the current price of $1,780 per coin. This significant reduction in supply is expected to alleviate some of the pressure on the second-largest digital asset in the market and make it increasingly scarce. With the present burn rate, an estimated 614,000 Ethereum will be removed from circulation annually, which, at the current price, equates to an astounding $1.09 billion.
The Ethereum network underwent a crucial update in August 2021, known as the London Hard Fork, which introduced the Ethereum Improvement Proposal (EIP) 1559. This proposal led to the implementation of a base fee mechanism that burns a portion of transaction fees. Since then, the Ethereum network has been steadily destroying coins, reducing the overall supply and creating deflationary pressure.
The ongoing burn has a direct impact on the Ethereum ecosystem, as it reduces the total number of coins in circulation. This reduction in supply, combined with increasing demand for the digital asset, has the potential to drive the price of Ethereum higher. The current burn rate of approximately 614,000 ETH per year further highlights the magnitude of the change brought about by EIP-1559.
It is essential to consider that the burn rate can fluctuate based on various factors, such as the number of transactions on the network and the gas fees associated with them. As Ethereum moves toward Ethereum 2.0, a proof-of-stake (PoS) consensus mechanism, the network is expected to become more efficient, which could impact the burn rate and its influence on the market.
In conclusion, the growing annual burn rate of Ethereum has led to a significant reduction in the overall supply of the digital asset, making it increasingly scarce. As the total amount of destroyed coins surpasses 66,000 ETH, the market dynamics are expected to evolve, with the potential for increased demand and higher prices. Investors and traders should keep a close eye on the developments in the Ethereum ecosystem and the factors influencing the burn rate, as these could play a crucial role in shaping the future of the digital asset.
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