In a sizzling development, Ethereum just set $8M on a digital fire. A whopping 4,742 ETH, valued at an eye-watering $8,729,350 based on the current Ethereum value of $1,840.86, went up in smoke on Thursday. And by smoke, we mean it was strategically removed from circulation. How? The coins were "burned," a process in which they're dispatched to an unusable wallet, making them forever inaccessible.
But why would Ethereum want to burn its precious ETH? Here's the backstory.
On August 5th, 2021, Ethereum didn't just change; it evolved. The blockchain underwent a crucial upgrade called EIP-1159. This wasn't just any regular software update, but one that dramatically altered the Ethereum fee model. Now, every Ethereum transaction carries a base fee that's variable and adjusts with the block space's demand. The magic touch? This base fee isn't collected or recycled; it's burned. That means every transaction forever diminishes the Ether supply.
Currently, Ethereum's adding new Ether at 4% annually. However, whispers in the crypto corridors suggest this might plunge to a mere 0.5-1% with the much-anticipated Ethereum 2.0 upgrade. This has many in the crypto world abuzz with excitement, speculating that soon, we'll be burning Ether faster than we produce it. The outcome? Ethereum could shift from being an inflationary asset to a deflationary currency.
Just to put things in perspective: The net annualized issuance rate for Ether stood at an astonishing -4.68% yesterday. The future for Ethereum? It's looking less inflationary and more fiery!
