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.