As bubbling markets continue to charge high transaction fees, the Ethereum network saw its first week of negative supply.
A small amount of Ether was destroyed after the London upgrade, which introduced a burn mechanism to Ethereum’s fee marketplace in August.
Due to high gas prices, Ethereum has seen seven consecutive days with deflationary issuance. This means that Ethereum must produce deflationary blocks consistently, so gas prices must remain at or near 150 gwei.
Anthony Sassano, co-founder of EthHub, stated that deflationary Ethereum wasn’t expected until “the merger” — when Eth2’s Beacon Chain and the Ethereum blockchain are set to merge. This is currently anticipated to take place in the first half 2022.
The Ultrasound.Money-fee burning tracker reports that around 15,000 Ethereum ($65 million at current price) are being burned daily. WatchtheBurn reports a net issuance of minus 8,034 ETH per week (roughly $34 Million) when you take into account the new ETH created.
More than 724,400 Ethereum worth $3.1 Billion have been permanently destroyed since the London upgrade.
According to Etherscan, the average cost for an ERC-20 token exchange is $46. It can be more complicated to do something like provide liquidity for a DeFi protocol, or make a token swap on Uniswap. This could cost up to $140.
Sassano stressed that the upgrade has not raised gas prices, but made them more predictable. He stated that EIP-1559, contrary to popular belief has not raised gas prices. It has actually helped with spikes in demand (such like during hyped-up NFT mins), which has resulted in a smoother network overall.
According to the Bankless Ethereum Q3 Network report, the transaction value settled between July and September was $536.5 billion. This is almost 400% more than the same period last.
Related: Ethereum supply briefly turns into deflation when gas prices spike
Many Ether advocates want to encourage users to migrate to the emerging layer-two ecosystem, despite Ethereum’s initial deflationary week.
L2beat reports that there is an unprecedented $4.68 billion worth of value across all L2 networks. As Ethereum users seek to avoid the excruciating transaction fees, this TVL has risen almost 500% in the last two months.