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The Ethereum blockchain has burned around $3.8 billion worth of Ether (more than 800,000 ETH) since the implementation of EIP-1559, which has likely contributed to the ongoing rally for the second-largest crypto asset.
ETH Burn Volume Crosses $3.8 Billion
In August 2021, EIP-1559, also called the London Hardfork, introduced the concept of burning a portion of the gas fee for all Ethereum transactions. EIP-1559 was introduced to stabilize the volatility of transaction fees on Ethereum. However, it also added a deflationary mechanism to its native asset—ETH.
Since the implementation and for all activity on the network, more than 800,000 ETH has been burned, per the latest data. This means that nearly $3.8 billion worth of ETH has been taken out of the supply. Furthermore, 9909 ETH (or about $47 million) was burned just in the last 24 hours, according to ultrasound.money, a website tracking this specific metric.
Notably, ETH is the second-largest cryptocurrency and the native token used to pay for all transactions on Ethereum—the very blockchain that underpins the majority of value locked in decentralized finance (DeFi). The sustained gas fee burn and high demand for ETH across hundreds of dApps support the argument that the asset has become a good store of value or “ultrasound money,” according to its founder Vitalik Buterin.
EIP-1559 implementation has also become a major catalyst for ETH’s rally over the last few months. Notably, the crypto asset has been up around 59% since the start of October and it is currently trading at its all-time high price of $4,740. If the upward movement continues, ETH may surpass the milestone target of $5000 within November.
However, Ethereum still has a long way to go to address its scalability issues. The high fees and slow transactions on Ethereum have been known to hamper user experience. These issues have reportedly contributed to the rise and adoption of other Layer 1 blockchains like Binance Smart Chain, Solana, Fantom, and Cosmos. Several Layer 2 solutions have found significant adoption as well to mitigate high gas fees.