It’s been nearly a week since the Ethereum London upgrade went live, and over 20,000 ETH have been destroyed, giving analysts an estimate of the yearly burn rate.
Last week, on August 5, Ethereum’s highly anticipated London hard fork was implemented. As part of a restructure of the gas auction system for transaction payments, it implemented a new fee-burning mechanism.
Between 25% and 75% of the base, fee is now being destroyed in a continuous process that could turn the Ethereum ecosystem into a deflationary form of “ultrasound money” once proof-of-stake is implemented.
More than 20,000 Ethereum were destroyed.
At the time of writing, the amount of ETH burned in the previous five days is 20,600, according to the ultrasound.money tracker. At today’s prices, that’s roughly $64 million burned in less than a week.
The OpenSea NFT marketplace is currently the top Ethereum-based platform for burning fees, having burned 735 ETH, or $2.3 million. Uniswap v2 comes in second with 348 ETH burned, and Axie Infinity, another NFT platform, has removed 318 ETH, or nearly $1 million in transaction fees.
Etherchain reports an average burn rate of 3 ETH per minute over the last 24 hours. This equates to approximately 4,320 ETH per day, approximately 30,240 per week, and 131,000 per month. On a yearly basis, this could result in the burning of 1.57 million ETH, or approximately $4.9 billion at current prices.
Naturally, all of these figures are speculative, as network fees fluctuate with demand and prices are not fixed. It does, however, provide a snapshot of current conditions. These figures could rise significantly if Ethereum demand and prices rise over the next few years, which most analysts believe is highly likely.
$21 billion is being bet on ETH 2.0.
Aside from trading, decentralized finance (DeFi), and non-fungible token (NFT) minting, a large portion of ETH has already been staked on the Beacon Chain. These tokens are locked away and unmovable until “the merge” occurs in late 2022, when ETH 1.0 and the proof-of-stake blockchain are combined.
According to the ETH 2.0 Launchpad, there were 6.8 million ETH staked on the Beacon Chain at the time of publication. At current prices, this is worth approximately $21 billion, which is greater than the total Ethereum market cap in April 2020.
This narrative of “ultrasound money” has been reflected in ETH prices, which have far outperformed bitcoin this year. At the time of publication, the asset was trading at $3,115, up 5% on the day.