ETHEREUM

Ethereum achieves negative issuance for the first time in a day! Founder Vitalik: This is still inflation, but impressive

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Ethereum achieves negative issuance for the first time in a day! Founder Vitalik: This is still inflation, but impressive

Since the implementation of the EIP-1559 upgrade, Ethereum has experienced its first deflationary day in history. The amount of Ether burned on 9/3 was less than the issuance, marking the first negative issuance. As of now, a total of 223,000 Ether has been burned, valued at over 8.6 billion USD.

According to ETH Burn Bot, the data for the 24-hour period on 9/3 UTC is as follows:

  • Amount burned: 13,838.3717 ETH
  • Issuance: 13,485.5 ETH
  • Annual issuance: -0.11% based on daily calculations

Is Ethereum Heading for Deflation?

Founder of Week in Ethereum News, Evan Van Ness, estimated on Twitter that Ethereum was heading towards deflation on September 3rd.

The calculation was based on "4.5 blocks per minute * 2.1 ETH per block = 9.6 ETH issued per minute," and by September 4th, the burn rate had briefly peaked at nearly 10 ETH.

https://twitter.com/evan_van_ness/status/1434009185834999808

However, upon further examination a few days later, both Ultrasound Money and Etherchain showed a burn rate around 7.2 ETH.

Vitalik: Still Inflationary

Since the implementation of EIP-1559 on August 5th, it has indeed significantly helped the coin price, with the highest increase reaching 51%, pushing Ethereum back above $4,000 since mid-May.

The community is quite optimistic about Ethereum moving towards deflation. However, according to core developer Justin Drake's model released on August 8th here, even with more ETH staked as validators and a constant annual return of 6%, the annual supply would decrease by 1.6 million ETH, bringing the annual supply rate down to 1.4%. It would still be an inflationary asset, but with greater deflationary pressure.

Some in the community shared on Reddit that Ethereum had its first deflationary day, which caught the attention of founder Vitalik Buterin. He stated:

Technically, it's not fully deflationary, as with the transition to PoS, the daily reward of around 1,200 ETH exceeds the 800 ETH required for the deflationary mechanism, but it's still impressive!

Blue: Block rewards; Red: Daily burn fee