The Ethereum network experienced its first week of deflation in a row as an active market keeps transaction fees consistently high.

With the London upgrade, which introduced fee burning in early August, a small amount of Ether has been destroyed with every transaction on the network since then.

With gas prices remaining high, Ethereum has seen seven consecutive days of deflation, meaning more ETH has been removed from supply than is created by mining. In order for Ethereum to be able to continuously generate deflationary blocks, the gas price must always remain above 150 gwei.

EthHub co-founder Anthony Sassano commented that deflation of Ethereum is not expected until “consolidation” – if the Ethereum blockchain is to merge with Eth2’s beacon chain, which is expected to happen in the second half of early 2022.

According to the charge burn tracker Ultrasound.Money, around 15,500 ETH (67.5 million US dollars at current prices) are burned every day. In calculating the rate of newly created ETH, WatchtheBurn reports a net weekly release of -8,034 ETH (about $ 34 million) at press time.

Source: Ultrasound Money

Since the London upgrade, over 724,400 ETH worth $ 3.1 billion have been permanently destroyed.

According to Etherscan, the average cost of an ERC-20 token transfer is currently $ 46, a slightly more complex transaction like providing liquidity for the DeFi protocol or swapping tokens on Uniswap can currently be as high as $ 46 costs.

Sassano points out that not only does the upgrade not increase the amount of gas, but it also makes it more predictable.

“Contrary to popular belief, EIP-1559 did not raise gas prices and in fact provided significant support during peak demand (such as during the NFT minting frenzy), which resulted in smoother grid operations.

Ethereum price is up nearly 1% and is trading at $ 4,341 after hitting a more than 2% retracement from the new ATH of $ 4,455 on October 8th.

Source: TradingView

According to the Bankless Ethereum Q3 report, the value of transactions paid out between July and September of this year is a whopping $ 536.5 billion, an increase of nearly 400% over the same period last year.

Despite the first week of deflation, many Ether proponents want to create incentives for users to switch to trading with the burgeoning Layer 2 ecosystem.

According to L2beat, $ 4.68 billion is currently locked on various L2 networks. TVL has grown nearly 500% in the past two months as Ethereum users increasingly look for ways to avoid high transaction fees.

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Annie

According to Cointelegraph

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