🔥🔥🔥 $ETH burn rate drops to lowest levels as gas fees hover at 2 #gwei
Ethereum’s Daily ETH Burn Hits Lowest Point in Years Amid Low Gas Fees
The daily amount of ETH burned on the Ethereum network has reached its lowest level in years, with gas fees currently ranging between 1 and 2 gwei. On Saturday, only 210 ETH were burned, a significant drop from recent figures. This decrease in burning is a result of the minimal base fees, which have affected ETH issuance and overall network inflation.
On August 5, when gas fees were around 100 gwei, the daily ETH burn surged to 5,000 ETH. In contrast, the current low gas fees have led to an increase in the net ETH emission, which exceeded 2,100 ETH on Saturday, according to data from The Block.
The drop in gas fees and the resultant lower burn rate have sparked discussions about potential solutions to manage the network's inflation. Gnosis founder Martin Köppelmann has suggested that increasing the gas limit temporarily could help counterbalance the low base fees. He argued that raising the gas limit might boost Layer 1 activity and offset the effects of staking rewards.
The Ethereum London hard fork, implemented in August 2021, introduced the EIP-1559 upgrade, which includes a burned base fee and a priority fee (tip) for validators. The base fee, which fluctuates with network activity, impacts the amount of ETH burned, thus influencing the supply.
The current decrease in gas fees is also attributed to the increased adoption of Layer 2 scaling solutions and blob transactions introduced in the Dencun upgrade in March, which have contributed to reduced costs on Layer 2 networks.
As of now, ETH is trading at $2,640, up nearly 10% year-to-date, with a market capitalization of $305 billion, according to The Block.
Source - theblock.co
