Part of ethereum improvement proposal (eip) 1559, launched in august 2021, the ethereum protocol has been destroying eth (ether) at a rapid rate. this burn mechanism has resulted in the removal of 2.8 million eth from circulation, which is equivalent to around $4.6 billion at today’s prices. the deflationary trend is expected to continue over the next two years.
Burning of eth has been occurring since eip-1559 was implemented. according to ultrasound money, in the last seven days, 16,364 eth has been destroyed at a rate of 1.62 eth per minute. this means that more eth is being destroyed than is issued to miners. supply growth has now dropped to -1.06% per year since eip 1559.
Burning of eth is largely driven by non-fungible token (nft) and defi activity. this week, almost 8,000 eth has been destroyed due to these two categories, with opensea and uniswap v3 being the key drivers. additionally, 705 eth was burned due to usdt transfers, while usdc transfers burned 228 eth. usdt continues to be the most popular stablecoin on ethereum. every transaction on the network results in eth being burned, making ethereum more deflationary than bitcoin. the ethereum community will continue to watch it burn.