For the first time since its EIP-1559 upgrade, the daily issuance of Ethereum (ETH) – the second-largest cryptocurrency by market cap globally – went negative. On September 3, 2021, its net emission was -333, which is a negative figure posted 30 days after the upgrade, hitting a clear milestone in the issuance of Ether.
More ETH was being burned than produced by miners in a 24-hour time slot, meaning a switch in Ethereum’s policy by burning part of the expensive transaction fees in every new block. Since then, according to Ultra Sound Money, around 193,000 ETH has been burnt, which is worth over $677 million nowadays.
ETH Burnt
Now, figures unveiled that 203,266.90 ETH were already removed, implying that the current burn rate is approximately 4.56 Ether per minute. The crypto community took the upgrade deployed by the network as a significant shift in its monetary policy because it’s offsetting inflationary pressure due to the issuance of new tokens.
And yes, the market is not numb to the deflationary tone that Ethereum experienced at the start of September. Now, ETH daily issuance has been ridding such a deflationary trend. A proof of it is the current mining revenue brought by Ethereum, which was attributed to the price’s rally itself and the NFT hype, rather than the price’s rally and a monetary policy favoring an inflationary tone.
NFTs Influencing ETH Prices
On the same line, Ultra Sound Money’s charts revealed that almost 15% of the burnt ETH in August belong to transaction fees tied to on-chain activity and the NFT’s mania witnessed over the month in big marketplaces like Opensea.
However, it should be noted that ETH supply surged again on September 5, 2021, becoming inflationary again despite the daily issuance trend. But we cannot state at its fullness that the Ethereum blockchain became deflationary.
When EIP-1559 was deployed, the total ETH burned was lesser than those burnt during London’s fork. With this brand-new upgrade, the proposal was intended to make a coding change to allow block sizes to expand further due to the congestion that the blockchain has experienced in the last few months.
ETH Flirting with The $4,000 Threshold After Upgrade
The surge of interest in NFTs and decentralized finance (DeFi) apps have put Ethereum’s blockchain working too hard, creating controversy in the crypto sphere because of the so-crowded network. This upgrade sought to burn the base fees rather than pass them to the miners who validate network transactions, aiming to reduce the total supply of ETH.
That said, although the EIP-1559 upgrade looks forward to reducing the speed at which Ether supply grows, it doesn’t necessarily imply that it would lower the supply of ETH. Nevertheless, such a maneuver boosted ETH prices to hit a fresh high at $3,928 on September 3, representing a 30-day rally of around 56%.
Due to the bloodbath experienced in the crypto markets on September 7, ETH flirted with the $3,000 mark, but then it recovered fastly to consolidate around $3,500. Will the effect of the EIP-1559 upgrade remain alive? Shall we see a continuing deflationary trend in the ETH daily issuance?
