$1B worth of ETH was burned for non-fungible tokens in early days of 2022
According to blockchain-based data researched by Nansen Analytics, over $1.096 billion worth of Ethereum (ETH) was burned in the past month. Most of this burning occurred when the EIP-1559 was introduced in August 2021 and a portion of fees is taken out circulation for every transaction conducted. Sending ether transactions are not costly, but performing more rigorous operations, such as creating non-fungible tokens through smart contracts requires a lot of gas.
From January-February, OpenSea transaction volume hit an all-time high at $3.5B, coming in at No.1 on a burn leaderboard with 65,778 ETH ($181.7M) burned in 30 days. The top two projects were token burns from Ethereum transactions and factivity on Uniswap (UNI), numbering 35,696 ETH ($98.6 million) and 24,223 ETH ($66.9 million), respectively.
However, due to Ethereum’s inflationary monetary policy that issues new ETH every year, there’s a chance that the supply of ETH will reach its maximum capacity only after it transitions the POW mechanism to POS.
Once this event takes place the total amount of new emissions will be less than that of token burns, resulting in a deflationary network. The PoM transition, “the merge”, will happen in the 2nd or 3rd quarter of this year. Before that, the network’s total hash rate has still managed to reach a new highest point. The Ethereum Foundation recently announced that they would be changing the name to a more appropriate one ‘ETH 2’. It will now be called the consensus layer.