The Ethereum ETH/USD burning frenzy shows no signs of slowing down since the introduction of the London fork. Glassnode data reveals the total number of Ethereum burned has recently reached a staggering 3 million. At the current price of $1,708 at the time of publication, this amount equates to slightly over $5 billion.
What Are Ethereum’s Burn Tokens?
Ethereum’s burn tokens refer to the permanent removal of tokens from circulation. The process involves sending the tokens to an inaccessible address, rendering them unusable. This process aims to decrease the supply of tokens over time and increase their value.
It is worth noting that these burned Ethereum units were previously intended to benefit miners who no longer exist due to Ethereum’s transition to a proof-of-stake blockchain.
London Fork And Burn Tokens
The London fork, which was enacted in August 2021, introduced several major changes to the Ethereum network. One of the most critical changes was the introduction of Ethereum Improvement Proposal (EIP) 1559. This proposal introduced a fee-burning mechanism that aimed to reduce the volatility of Ethereum’s transaction fees.
The EIP 1559 proposal involves burning a small fraction of the transaction fee paid by users for each transaction. This process ensures the tokens are removed from circulation, thus decreasing the overall supply of Ethereum tokens. Since the implementation of the London fork, the number of Ethereum burned has steadily increased, reaching a total of 3 million in the first week of March 2023.
Implications Of Ethereum’s Burn Tokens
The burn tokens represent a significant milestone for the Ethereum network. Decreasing the supply of tokens is expected to increase Ethereum’s value over time and lower the inflation rate.
This increase in value is expected to attract more investors and users to the network, ultimately leading to greater adoption.
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