Ethereum Had a Net Deflationary Week for The First Time

Ethereum Had a Net Deflationary Week for The First Time

With Ethereum’s London hard fork in full effect, the network has been burning eth for at least three months. However, during the last seven days, more eth was burned on the platform than was generated, amounting to the first net-deflationary week for ether.

Tremendous Value Burned From Ethereum

According to data from Watch the Burn, over 100,000 ETH has been burned in the last seven days. Meanwhile, only 93,000 ETH was issued in the same time frame as block rewards to miners. This puts the total net issuance of ether at about negative 8,600 – around $37 million.

The network experienced its first day of net-negative issuance in early September.

Immense value has been removed from Ethereum since the London hard fork introduced EIP-1559. In a little over a month, over $1 billion in ETH were burned in transaction fees which previously would have been used to reward network miners. Today, miner rewards are issued as an optional “tip” provided by network users.

However, the funds generated from these tips are only a fraction of former rewards. In the last seven days, less than 14 thousand ETH was distributed in tips to miners. This is why Sparkpool – the largest Ethereum mining pool – opposed EIP 1559 when it was introduced.

According to Tokenview, some of the projects responsible for the burn include Fat Ape NFT, Parallel, XRUNE, and others, apart from the usual suspects which are Uniswap, OpenSea, and USDC.

Ultra-Sound Money?

Watch the Burn also displays a “net reduction” percentage, which indicates how much eth issuance has been reduced since the introduction of EIP-1559. This percentage is over 100% on the week – another indicator that more eth has been burned than has been minted. The site implies that this exact phenomenon is a good thing, calling ether “ultra-sound money.”

Many Ethereans made this same claim immediately following the London hard fork. ConsenSys founder Joe Lubin said that the upgrade was turning Ether into “ultra-sound money” on its arrival. Recently, Evan Van Ness – founder of Week in Ethereum News – mocked Bitcoin for its inability to reduce supply in the same manner.