Since August 5, 2021, the Ethereum network’s burn rate has exceeded 2 million ethers worth $5.81 billion. The 24-hour burn rate of the crypto network is 1.74 ether per minute, or nearly $5K worth of ether burned every 60 seconds, according to metrics.
Reduced currency availability is part of a multi-pronged effort to improve the blockchain and limit the number of coins crypto miners can earn with each transaction.
Why is Ethereum destroying its own cryptocurrency on purpose?
Last year, the network started adopting EIP 1559. This resulted in a new structure where transaction fees were divided between a basic charge and a miner tip. The miner now receives the tip, but the basic fee is burned.
The new mechanism stops miners from “gaming the system” with spam transactions, says Ethereum creator Tim Beiko. Spam transactions may boost everyone’s minimum charge.
According to Beiko, this may also assist in maintaining network transaction fees.
Depending on the network’s congestion, these fees might add up to hundreds of dollars for each transaction.
The burn also ensures all transaction fees are paid in Ether, securing Ether as the Ethereum network’s currency. On Bitcoin, miners may charge their consumers in various currencies, but on Ethereum, the payment must be paid in Ether.
In the long term, burning ether may deflate it, reducing supply and raising value. Deflation isn’t the purpose, and neither is the burn, says Beiko.
While Ether has already lost a significant chunk of its value, the network’s “merge,” which will convert the blockchain from a proof of work to a proof of stake, may destroy considerably more.
However, despite the fact that more than 2 million ether have been consumed, each day’s rate of burn has been hovering at 1.74 ethers per minute, or around $5,059.05. The network burns 1.51 ETH per minute when measured over the course of an hour.
Opensea, a non-fungible token (NFT) marketplace, was the highest ether burner on March 21 with 229,922 ether worth $790 million destroyed. A total of 185,920 ETH transfers, worth $674 million at today’s ETH exchange rates, have been destroyed by ETH transfers, making them the second-largest burner of ETH.
The Uniswap v2 decentralized exchange (dex) platform is in the third position with 126576 ether burned. Tether (USDT) transactions are the fourth-largest burner, with 92,325 ETH destroyed.