Despite the market stagnation, Ethereum still recorded ETH burn thanks to the EIP-1559 upgrade reaching a record high in the past 30 days.
According to data from Ultrasoundmoney on February 2, 395,821.49 ETH, equivalent to more than $1.096 billion, was burned during the month. With the introduction of EIP-1559 last August, a portion of gas fees will be taken out of the circulating supply for every transaction that occurs on the Ethereum blockchain.
Although ETH gas fees are under extreme pressure, falling by 53% in just 1 month in the face of a red market, sending and receiving ETH does not cost much, but higher-level functions , such as NFT minting, combined with the boom in this sector has revived gas.
As we can see from the above statistics, OpenSea is currently #1 on aggregate rankings, with 66,683.69 ETH ($184.9 million) burned in the last 30 days. In second and third places come from Ethereum swaps and DEX exchange Uniswap (UNI), with 36,057 ETH ($100.02 million) and 24,252 ETH ($67.2 million), respectively.
In January, the total NFT trading volume on OpenSea reached an all-time high of $3.5 billion, following the completion of a $300 million Series C funding round earlier this year, at a valuation of 13, 3 billion USD. NFT trading volume has set a record of $23 billion in 2021 and shows no sign of cooling down until now. It is noteworthy that Ethereum is still the unique blockchain for NFT, especially with two popular collections Bored Ape Yacht Club (BAYC) and CryptoPunks.
However, Ethereum is still a relatively inflationary blockchain, the miner’s reward for validating transactions 2.42 million ETH ($6.77 billion) always surpasses the amount of ETH burned of 1.73 million ETH. ($4.8 billion) since the implementation of EIP-1559. As a result, net issuance is staying positive at 696,717 ETH ($1.94 billion). However, the community is very hopeful that this problem will be solved when ETH completely switches to Proof-of-Stake (PoS) mechanism.
When that happens, the total amount of new issuance will be less than the amount of ETH burned, leading to a deflationary network, ETH becoming more and more scarce, creating an important driver for the price of ETH to grow. The consolidation process moving towards PoS, called “The Merge“, will happen in Q2 or Q3 of this year. Ethereum recently removed the Eth2 branding in its new development roadmap.