Ethereum’s (ETH) burning has set a new single-day record after the implementation of EIP-1559 protocol. According to information, the total number of ETH tokens burned today was 69,200 ETH while the net issuance was of -61,600 ETH. After the implementation of EIP-1559 protocol, burning and net issuance of ETH have set new single-day historical records. Ethereum’s supply has decreased by 1.6% after the burn protocol was implemented, compared to what it would have been without the hard fork.
Merge protocol effect on ETH burning
As per some forecasts, Ethereum, the 2nd largest cryptocurrency in the world, is expected to become deflationary as the long-awaited ‘Merge’ implementation would reduce ETH issuance by 90%. It will result in the burning of the token in excess of the token issued. Ethereum has already experienced deflation due to which more ETH tokens are being burned. The net issuance of ETH after the Merge is expected to vary between -1% and -2.5%, depending on the network’s transaction costs.
Significance of burning of ETH tokens
The burning of ETH token is pointing to a significant decrease in its circulation supply. Also, the supply of ETH on cryptocurrency exchanges has been steadily declining in recent months.
The decrease in the supply of ETH is indicating that the digital asset’s price could experience additional upward movement in the short term. According to Etherscan, the average cost of an Ethereum transaction has risen to above $400 due to an increase in its demand may be due to short supply.
