Ethereum redefines itself with a radical upheaval: 2.5 billion dollars of ETH burned, a historically low supply of 120 million ETH, and a surging market since the merge. This deflationary transformation marks a turning point where scarcity and growing demand propel Ethereum to new heights. Welcome to the era of value sculpted by scarcity and the flame of token burning.
A decrease in supply, an increase in demand
According to recent financial data, Ethereum has burned 2.5 billion dollars of ETH since the merge in September 2022, leading to a decrease in its supply to a historic level of 120,211,380 ETH, representing a market capitalization of approximately 266.39 billion dollars.
A deflationary trend for Ethereum
This decrease in supply is part of a deflationary movement, contrasting with the previous inflationary trend where new ETH was constantly created. The burning of 1,195,238 ETH, equivalent to about 2.65 billion dollars, plays a crucial role in reducing the total supply and could reinforce the scarcity and value of ETH in the long term.
A deficit between production and demand
Despite the issuance of 885,581 ETH, equivalent to approximately 1.96 billion dollars, demand for ETH has outpaced supply. This illustrates that the ETH burn rate, according to financial data, continues to exceed production.
An impact on the NFT market
ETH transfers have also contributed to the decrease in supply, with a volume of 51,87 billion dollars on OpenSea, an Ethereum-based NFT marketplace.
An increased average burn rate on the Ethereum network
Since the implementation of the burn mechanism as part of the EIP-1559 upgrade in August 2021, the average burn rate is nearly double what it was before the Merge, averaging 3.09 ETH/minute. In conclusion, Ethereum’s deflationary trend since the Merge illustrates a shift in its economic model and strengthens its dominant position in the cryptocurrency market. The decreasing supply and increasing demand for ETH, along with the high average burn rate, are key factors contributing to its market growth.
