Nearly two million ETH could be burned in the next year, according to calculations.
The recent EIP-1559 update introduced a completely new rate-burning mechanism that could completely change the way Ethereum works. According to a new calculation, nearly two million ETH could be burned in the next year.
Currently, nearly 10,000 ETH have been burned. To count the potential amount of ETH that could have been burned, journalists implemented the EIP-1559 fee mechanism on the Ethereum core network that went live in 2015. The total amount of ETH burned would be 2.6 million coins. If we assume that the stable price of Ethereum would have been $3,000, that means the market would have lost $8 billion in currencies over that period.
The amount potentially burned of Ethereum was counted from May 10, 2020, with the implementation of the current tariff burning mechanism. During the one-year period, 2.936 million blocks were generated with an average transaction rate per block of 1.13 ETH. With the same transaction activity that we had a year ago, there will be 0.89 ETH burned per block. The average block generation time is 13 seconds, or 6,628 blocks per day.
In some periods, such as DeFi Summer, the average rate changes, making it more difficult to predict the potential amount of ETH burned in the specified time period. The average number of 1.8 million ETH was theorized based on the stabilized rate assumption.
Currently, the circulating supply of Ethereum is increasing annually by 4.8 million. The inflation rate for this increase is 4.39%. After the update, the emission of ETH by the network will be progressively reduced. With a 38% emission reduction, we will presumably see an inflation rate of 2.73% for ETH next year.