The Ethereum ecosystem is back on track with its mission to ensure that Ether is deflationary following a significant increase in the burn rate. Several factors are said to have contributed to this milestone, including voluntary exits by validators.
Over 106,000 ETH Burned In The Last 30 Days
According to data from Ultra Sound Money, over 106,000 ETH have been burned in the last 30 days. In that same period, only just over 70,000 ETH have been issued. This has caused a significant decrease in Ethereum’s supply, with it being down by over 35,000 ETH.
This is a welcome development, as the disparity between the burn and issuance rate hasn’t always been this obvious. That led to concerns as to whether ETH was truly deflationary or not. It also began to seem like the London Hard Fork wasn’t effective. Ahead of the Merge, Ethereum introduced this upgrade in its efforts to make ETH deflationary.
ETH investors are sure to be delighted with the fact that the token has once again become deflationary. Such development could propel ETH’s price to new heights. Moreover, it comes at a time when the market is preparing for an imminent bull run. As such, this macro factor, alongside other ones, places it at the forefront to be one of the biggest gainers.
ETH price recovers above $2,200 | Source: ETHUSD on Tradingview.com
Factors That Have Contributed To The Ethereum Deflationary Status
A report by Glassnode provided insights as to why Ethereum is deflationary once again. One of them happens to be the fact that the number of validators onboarded has slowed in recent weeks. Instead, Ethereum has an increasing number of validators exiting the ecosystem. This development has ultimately caused ETH issuance to slow.
This trend of exits notably began at the start of October. This seems to be when investors actually began to take full advantage of the Shanghai upgrade that had taken place in April. Before October, the exiting event is reported to have been at an average of 309 validators per day. That increased to 1018 validators per day at the start of October.
Meanwhile, the burn rate during this period is said to have increased significantly due to the growing network activity. The increase in network usage has led to higher gas fees. The daily amount of transaction fees burned through the EIP1559 protocol has also increased as a result. The accumulated fees burned between October and November are reported to have reached 5,368 ETH.
Ethereum is flying high at the moment, and this could be partly due to its recently achieved status. At the time of writing, the crypto token is trading at around $2,240, up by over 3% in the last 24 hours, according to data from CoinMarketCap.
Featured image from CryptoTV, chart from Tradingview.com