Ethereum has seen seven consecutive days of deflationary issuance amid its impressive price rally alongside an increase in demand.
The London hard fork laid the foundation for Ethereum’s negative supply through the introduction of a burning mechanism. In the past seven days, more Ethereum has been destroyed than has been created from mining.
Over $3 billion worth of Ethereum has been burned since EIP-1559 was implemented. According to data from Ultrasound Money, a total of 15,000 ETH currently valued at about $60 million is being burnt daily. Meanwhile, analytics from WatchTheBurn revealed that the difference between the burn rate and net issuance is minus 8,000 ETH, as of press time.
“Due to the current PoW issuance (4.5%), a deflationary ETH was not something that was expected to happen until The Merge,” said Anthony Sassano, co-founder of EthHub on The Daily Gwei.
Ultrasound Money also predicted that Ethereum’s supply may be reduced by 2% a year once the transition to ETH 2.0 is completed. However, it is worth mentioning that Ethereum does not have a supply cap at the moment. Its circulating supply is 118,187,792 ETH, in contrast to Bitcoin that has a supply cap of 21,000,000.