ETH sings song of deflation
Each year, an estimated 603,000 ETH is put into circulation. This is done by issuing ETH in blocks. Before the burn is executed, this will increase the number of ETH in circulation, but not anymore.
Ethereum burning has been growing in recent months and it is expected to burn 835,000 ETH every year. This is much more than the ETH put into circulation. Therefore, for the first time since the launch of the network, more coins will be taken out of circulation than put into circulation.
The issuance rate has also gotten much lower since the network switched from a proof-of-work to a proof-of-stake mechanism. Previously, more than 4 million tokens were issued each year, and the move to Proof of Stake has reduced them by more than 60%.
Rivalry with the best
One of the issues that has plagued Ethereum has been the number of new tokens released into circulation this year. Back when the network was still using Proof of Work, new tokens were introduced at a rate of 3.66% each year. This was quite high compared to the BTC issuance rate of 1.72%. But the move to Proof of Stake has proven to be a game changer.
After the update, the ETH issuance rate has decreased significantly. Now, new tokens are being introduced at a rate of 0.07% each year, which is significantly less than that of Bitcoin, which remains its biggest competitor.
The merger was done 36 days ago, and if the network was still in proof-of-work, there would have been a total of 353k ETH in circulation during that time. But as the mechanism changed, only about 8k ETH was added.
ETH staking has also grown during this time, with over 14.3 million coins currently outstanding on the network. Since the implementation of EIP-1559, 2.66 million ETH have been burned. ETH transfers lead in burnt transactions, while OpenSea ranks second in NFT transactions.
