Impact of the London Hard Fork on Ethereum
Since the introduction of the London hard fork on August 5, 2021, the Ethereum blockchain has experienced a significant alteration in its economic structure. Over a period of 1,438 days, this upgrade has led to the destruction of more than 4.6 million ether, accumulating a staggering loss of approximately $13.57 billion in value. Despite this substantial reduction in ether supply, the overall issuance of Ether continues to rise, currently reflecting an annual inflation rate of 0.801%.
Changes in Transaction Fee System
The London hard fork, which was implemented at block height 12,965,000, initiated a pivotal shift in Ethereum’s transaction fee system, where a fraction of gas fees began to be permanently removed from the circulating supply. Recent statistics from ultrasound.money highlight that these ether burnings average out to nearly 2.22 ETH extinguished every minute.
Sources of Ether Destruction
Transaction activities have been the primary contributor to this ether destruction, incinerating approximately 375,959 ETH. Additionally, significant contributions have come from the NFT platform Opensea, which has burned around 230,051.12 ETH. The decentralized exchange Uniswap version 2 and transactions involving the stablecoin Tether (USDT) have further added to the burn totals with respective contributions of 227,044.95 ETH and 210,070.05 ETH.
Inflationary Trends and Comparisons
Despite the remarkable destruction of 4.6 million ETH, the inflationary trend persists, albeit at a median issuance rate mirroring Bitcoin’s at 0.801% since the hard fork’s launch. Moreover, recent figures indicate a slight decrease in Ethereum’s seven-day burn rate, showcasing new minting of 16,745.66 ETH last week, bringing the seven-day issuance rate down to 0.723%.
The dynamic between ether issuance and burn remains a critical point of discussion among analysts as Ethereum’s economic framework continues to mature. While the current 0.801% supply increase signifies inflation, it starkly contrasts with the significantly higher 3.394% that Ethereum would have encountered if it had maintained a proof-of-work (PoW) consensus model.
Bitcoin Comparison
For comparison, Bitcoin’s issuance stands at 0.809% presently, although its mean average over the same period clocks in at 1.476%, which is substantially higher than Ethereum’s numbers since the London hard fork. Notably, during this duration, the Ethereum network has added 3,695,537 ETH, equating to about $10.89 billion in freshly minted value. In contrast, Bitcoin miners saw the creation of 1,092,150 BTC, amounting to an impressive $129.92 billion within the same timeframe, particularly in light of the recent halving event in 2024.
