Key Points
- Ethereum’s burn rate surged in January, reducing its circulating supply to a new low.
- Increased network activity, NFT sales, and DeFi growth have contributed to this surge.
Ethereum’s Burn Rate and Circulating Supply
In January, Ethereum’s burn rate experienced a significant increase. Consequently, the coin’s circulating supply has been reduced. Over the last 30 days, 18,109 Ether, valued at roughly $53.17 million, were removed from circulation. This has pushed Ethereum’s circulating supply to a new low following “The Merge”.
According to Ultrasound.money, Ethereum’s circulating supply currently stands at 120.16 million ETH. This is the lowest it has been in 524 days, since the transition to a Proof-of-Stake (PoS) consensus mechanism, known as “The Merge”. When there is a surge in demand and utilization of the Ethereum network, the burn rate increases. This results in more ETH coins being permanently removed from circulation.
Network Activity and Transaction Fees
A spike in network activity often leads to higher transaction fees. Data from Messari reveals that average transaction fees on the Ethereum network have risen by an impressive 100% since February 17th. An examination of Ethereum’s non-fungible tokens (NFTs) and decentralized finance (DeFi) sectors confirms the increase in network demand.
CryptoSlam data shows that NFT sales volume on the Ethereum network has reached $395 million this month. With a few days left in the month, this already represents the highest monthly NFT sales volume for Ethereum since April 2023. In the last 21 days, 619,000 NFT sales transactions have been completed by 91,000 unique sellers and 108,000 unique buyers.
DeFi Sector Growth
In the DeFi sector, a key growth indicator on the Ethereum network is the rise in total value locked (TVL) over the last 30 days. DefiLlama data indicates that Ethereum’s TVL is currently $46 billion, a 45% increase over the last month. During this time, Lido Finance, the leading protocol on the chain, reported a 39% TVL increase.
DEX Trade Volumes
Furthermore, Ethereum has seen a surge in its decentralized exchange (DEX) trade volumes amid the current rally in crypto asset values. According to Artemis, the total volume of daily transactions executed on DEXes on the Ethereum network has soared by 118% since February 17th.
