Ethereum Token Burns Reduce Supply, Boost Value: Nearly $9B Tokens Destroyed

• Ethereum (ETH) implemented a token burn mechanism on Aug. 5, 2021, through the Ethereum Improvement Proposal (EIP) 1559 upgrade.
• Since then, nearly $9 billion worth of tokens have been burned cumulatively, data from Glassnode indicates.
• The daily burn rate of Ethereum has decreased significantly and nearly stagnated since the collapse of Terra-Luna in May 2022.

Ethereum (ETH) implemented a token burn mechanism on Aug. 5, 2021, through the Ethereum Improvement Proposal (EIP) 1559 upgrade. Token burning is a process by which tokens are made unspendable, effectively removing them from circulation. The purpose of this burn is to reduce the overall supply of ETH tokens, which can help increase the value of the cryptocurrency.

Since the burn mechanism was instituted, data from Glassnode indicates that nearly $9 billion worth of tokens have been burned cumulatively. A total of around 2.8 million ETH tokens have been removed from the supply. The data from ultrasound.money suggests that 1,896.30 ETH, worth around $2.2 million was burned over the past day.

The daily burn rate of Ethereum has decreased significantly and nearly stagnated since the collapse of Terra-Luna in May 2022. During the bull run of 2021, $20 million to $75 million worth of ETH was being destroyed daily. This has fallen to only around $2 million to $4 million worth of ETH burned every day in December 2022.

The implementation of token burn has caused Ethereum’s average gas fees to fall from around 100-200 Gwei in early 2021 to 15-20 Gwei in December 2022. This lower fee structure has made Ethereum more attractive to developers and users, which has in turn helped to increase the overall usage of the network.

Ultimately, the token burn mechanism is helping to increase the value of Ethereum by reducing the overall supply of tokens in circulation. This, in turn, is helping to create a more attractive environment for developers and users, which will continue to drive the overall value of the Ethereum network.

FTX Seeks to Regain $167 Million of Crypto Assets from Bahamas Securities Commission

• Bahamas Securities Commission (SCB) instructed former FTX CEO Sam-Bankman Fried and his associate Gary Wang to transfer $296 million of digital assets to a Fireblocks cryptocurrency wallet controlled by the regulator.
• FTX and its associated debtors said that Bankman-Fried, Wang, and the SCB had no right to take control of the assets and will try to regain the assets and deliver them to creditors through its bankruptcy proceedings.
• The assets transferred by Bankman-Fried are now worth $167 million, and the SCB’s announcement yesterday did not allude to FTX’s claims.

On December 30th, FTX and its associated debtors reported that the Bahamas Securities Commission (SCB) instructed former FTX CEO Sam-Bankman Fried and his associate Gary Wang to transfer $296 million of digital assets to a Fireblocks cryptocurrency wallet controlled by the regulator. The assets allegedly transferred by Bankman-Fried include 195 million FTT, 1,938 ETH, and other assorted cryptocurrencies without significant value. Though those assets were worth $296 million in November, their value is now just $167 million.

FTX and its associated debtors assert that the SCB had no right to take control of the assets in question and that they will try to regain the assets and deliver them to creditors through its bankruptcy proceedings. The company notes that though the SCB holds said assets, the regulator may not be viable to sell this large quantity of FTT tokens at current spot prices — or at all.

FTX’s accusations are based on available evidence, though the SCB’s announcement yesterday did not allude to FTX’s claims. FTX insists that Bankman-Fried, Wang, and the Bahamas Securities Commission had no right to take control of the assets in question. As such, the company is now attempting to regain the assets and deliver them to creditors through its bankruptcy proceedings.

This announcement comes as a surprise to many, as the Bahamas Securities Commission had been relatively quiet on the matter. The $296 million transfer may or may not have been part of the $3.5 billion that the regulator is said to have seized from FTX. The company is now hoping to reclaim the assets and deliver them to creditors through its bankruptcy proceedings.

Regardless of the outcome, this situation is a reminder of the importance of understanding the legal implications of cryptocurrency transfers. FTX’s experience is a cautionary tale for other companies and individuals who are looking to use digital assets as a means of transferring funds.