Ethereum Experiences All-Time Low in Daily ETH Burn
On Saturday, Ethereum saw its daily burn rate of ETH reach an unprecedented low, reflecting a significant decrease in demand for the network’s blockspace. Data gathered from The Block indicates that only 53.07 ETH, valued at approximately $106,000, was burned due to transaction fees on that day. This marks the lowest burn value recorded to date, signaling a broader slowdown in on-chain activities.
Declining On-Chain Activity
The reduced burn rate is accompanied by declines across various metrics that gauge network activity. The seven-day moving average of active addresses on Ethereum has recently dropped to its lowest point since October 2024. Moreover, there have been noticeable declines in other critical indicators, such as new address creations, transaction counts, and overall daily on-chain volume. This trend indicates that user engagement with the Ethereum network has notably diminished in recent weeks.
EIP-1559 Mechanism Details
The drop in ETH burn is further significant considering Ethereum’s implementation of the EIP-1559 protocol, which revamped the transaction fee structure on the network. Under this mechanism, all ETH used to pay the base transaction fee is permanently burned, a design intended to curb inflation and potentially transform ETH into a deflationary asset during times of robust network usage. As current data suggests, the annual supply of ETH is expected to grow by approximately 0.76% based on the burn rate calculated from the past week.
Future Price Sentiments
The current decline in activity and the all-time low burn rate come at a time when industry analysts are reassessing the potential trajectory of Ethereum’s price. Standard Chartered recently revised its 2025 price target for Ethereum dramatically, reducing it from $10,000 to $4,000. Geoffrey Kendrick, the global head of digital assets research at Standard Chartered, noted that growing numbers and scalability of Layer 2 solutions are significantly influencing this outlook. Specifically, he mentioned that certain Layer 2 solutions, notably Base, are now generating substantial profits for themselves while impacting Ethereum’s overall ecosystem.
Conclusion
As Ethereum’s network experiences decreased on-chain activity and a historically low ETH burn rate, industry stakeholders are left contemplating the implications for the asset and its future. With evolving dynamics in transaction processing and Layer 2 networks, many are looking closely at how these developments may shape Ethereum’s landscape moving forward.
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Disclaimer: This article is provided for informational purposes only and is not intended as legal, tax, investment, or financial advice.
Author: Zack Abrams, a writer and editor based in Brooklyn, New York, with prior experience in Web3 media.
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