More than 100,000 Ether Already Burned in Just 3 Weeks, Daily Issuance Falls Below Bitcoin
Despite Ethereum doing 60x of Bitcoin’s daily total fees and 5x the daily number of transactions, ETH is still lagging in valuation, worth only 0.0669 of BTC.
In a matter of three weeks, over 108,118 ETH worth more than $340 million have been burned ever since EIP 1559 was activated on August 5th.
Throughout this time, NFT marketplace OpenSea remains the biggest contributor to the burn accounting for nearly 16k Ether. Uniswap V2, Uniswap V3, Axie Infinity, USDT, USDC, and MetaMask, are other top ETH burners, according to Dune Analytics.
As we reported, the burn has led the daily net ETH issuance to fall about 27%. Now, for the first time, Ether’s daily issuance dropped lower than Bitcoin’s as well, noted Lucas Outumuro, head of research at IntoTheBlock.
Ether’s net inflation was 1.11% annualized at 3,574 ETH compared to Bitcoin’s 1.75% annualized net inflation at 900 BTC at one point.
It was due to the recent surge in non-fungible token (NFT) activity that increased the Ethereum fees, in turn, the amount of Ether being burnt.
“This has led to several hours where more ETH was burnt than issued, effectively making it deflationary during brief periods of time,” said Outumuro.
“Ether’s decreasing issuance raises questions about how it is valued… Now that its issuance is provably lower (and potentially deflationary), it is likely to develop a monetary premium like BTC.”
As of writing, Ether is trading above $3,220, down about $28% from mid-May all-time high of $4,380 and worth 0.0669 of BTC, which is trading near $48k.
“Bitcoin's monetary premium stem is apparent when comparing fundamentals between BTC and ETH. Despite having 10x higher fees, ETH continues to be priced as 40% of Bitcoin,” Outumuro added.
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Not only Ethereum is doing 60x of Bitcoin’s daily total fees, but the daily number of transactions on the second-largest network is also 5x of the leading network, and yet Ether is still lagging in valuation.
When it comes to adoption, as we reported, throughout this year, the smaller holders (0.01 to 1 unit of the crypto asset) of Ether are growing much faster at 58% than Bitcoin’s 15% growth which has also been flat since the end of April, and are now ready to surpass it too.
Overall, Ethereum has over 20 million more addresses holding the digital asset.
“As NFTs and other applications continue to grow on Ethereum, this creates deflationary pressure and reinforces Ether's monetary premium. Ultimately, this aligns users and holders towards ETH becoming the store of value of the decentralized internet,” Outumuro noted.
When it comes to fundamentals, Ethereum’s hash rate has also hit a new ATH at 650.8 TH/s, surpassing the May peak of 643.8 Th/s, as per Etherscan.
The network’s transition from Proof-of-Work (POW) to Proof-of-Stake (POS) consensus is not coming until Q1 or Q2 of next year, which would then mark the end of POW mining.
Before even becoming a fully PoS coin, the implementation of EIP-1559 has affected the miner revenue as a large portion of their earnings from transaction fees, the base fee is getting burnt while only the tip is paid to miners.
“Despite the numerous headwinds for ETH miners, mining doesn’t seem to be slowing down,” said Delphi Digital.