- Ethereum has recorded 7 consecutive days of negative supply as burnt ETH surpasses mined ETH by 8,000 ETH.
- Goldman Sachs forecasts an $8,000 year-end price target based on crypto price trends against inflationary trends.
The Ethereum (ETH) network has seen its first negative supply for seven consecutive days. Essentially, more ETH is being burned out of supply than that which is being mined.
Since the August London upgrade, the network has been burning a portion of transaction fees to create a deflationary system. Currently, over $65 million (about 15,000 ETH) is burnt daily on the network, according to Ultrasound, a gas fee burning tracker. At press time, subtracting this from new ETH mined results in a weekly net issuance of minus 8,034 ETH (roughly $34 million) according to WatchtheBurn. The London hard fork has resulted in the permanent destruction of 724,400 ETH worth about $3.1 billion.
EthHub co-founder Anthony Sassano commented that the deflationary issuance was not expected until after ETH 2.0. The proof-of-stake network is currently expected to launch in the first half of 2022.
That said, Ethereum gas prices have to remain roughly above 150 gwei (about 0.00000015 ETH) to consistently produce deflationary blocks. Presently, the average cost of transferring an ERC-20 token is $46. More sophisticated activities like providing liquidity on a DeFi platform or swapping tokens on Uniswap currently cost as high as $140.
Ethereum and the EIP-1159 deflationary system
However, Sassano insisted that the EIP-1559 upgrade has made prices more predictable rather than increasing them.
Contrary to popular belief, EIP-1559 has not increased gas prices and has in fact helped considerably with spikes in demand (such as during hyped-up NFT mints) which has led to a smoother network overall.
The Bankless Ethereum Q3 network, nonetheless, reports that transaction fees amounted to $536.5 billion between July and September. The figure represents a 400 percent surge compared to the same period last year.
But even as Ethereum celebrates its first deflationary week, many Ethereum advocates are encouraging migration to the layer-two ecosystem. L2beat shows that there is a record $4.68 billion in total value locked (TVL) across various L2 networks. The figure represents a 500 percent surge in the last 2 months. It seems more and more Ethereum users are seeking ways to avoid the excruciating network fees.
ETH price developments
ETH, at press time, was trading at $4,377, 2.8 percent up in the day according to our data. On Friday, prices hit an all-time high of $4467.
Global investment bank, Goldman Sachs recently produced a report predicting an $8,000 hit by end of year. The foundation for this belief is that cryptocurrencies have traded in line with inflation break-evens since 2019, according to Zerohedge. This is shown in a chart of the Bloomberg Galaxy Crypto Index against the USD 2-year forward 2-year inflation swap.
Differently, Finder.com’s crypto research panel predicted a $5,114 year-end price, $15,364 by 2025, and $50,788 by 2030.
