Key Points
- Circle has removed $60 million worth of USDC from the Ethereum network.
- Activity on the Ethereum network, including NFT trades, has seen a decline.
Circle, the firm behind the USDC stablecoin, has withdrawn a significant amount of USDC from circulation on the Ethereum network.
Implications of USDC Burn
The removal of $60 million worth of USDC presents a double-edged sword for the Ethereum network. On one hand, fewer USDC tokens could potentially lower transaction fees and gas costs due to reduced network congestion. This could be a positive development for all users of the Ethereum network.
However, there is a downside for DeFi applications that heavily rely on USDC for liquidity and stability. The reduction in USDC could make it more difficult for these applications to operate smoothly. This could lead to decreased liquidity and increased volatility in DeFi markets, affecting users who depend on these services.
Network Activity and NFT Trades
In addition to the USDC burn, the Ethereum network has witnessed a decline in daily active addresses. The gas used on the Ethereum network has also slightly decreased. A possible reason for this decrease in activity could be a waning interest in Ethereum NFTs.
Data analysis revealed that the number of NFT trades on the network had significantly dropped. Notably, popular NFT collections such as BAYC (Bored Ape Yacht Club) and MAYC (Mutant Ape Yacht Club) saw a substantial drop in both the floor price and the volume of NFTs traded on the network.
Meanwhile, other networks like Solana and Bitcoin are seeing growth in terms of NFTs. If this trend persists, it could negatively affect the overall Ethereum ecosystem. At the time of writing, Ethereum was trading at $3,730.06, marking a 1.83% decline over the last 24 hours.
Despite the burning of USDC, other stablecoins such as DAI and USDT will not be affected by Circle’s actions, and interactions with these stablecoins will continue uninterrupted.
