The Ethereum network has seen its daily ETH burn drop to its lowest level this year – mainly due to a recent drop in Medium Gas Price .
Currently, Gas Price are hovering between 5 and 10 gwei, which is one of the lowest levels seen YTD and affects ETH issuance.
The reduction in network fees has resulted in less ETH being burned. On Sunday, the amount of ETH burned was just 610 ETH – marking a record low this year.
By comparison, the amount of ETH burned daily throughout the first four months of this year remained above 2,500–3,000 ETH.
The continued decline in Gas Price is due in part to the operational shift to Layer-2 scaling solutions as well as the growing adoption of blob transactions introduced with the Dencun upgrade in March — helps reduce transaction costs on Layer-2.
The dynamics of Gas Price and ETH burning is a closely watched aspect of the network's economic model. While low fees are beneficial to network users, reduced ETH burn has an impact on the deflationary aspect of Ethereum.
The London Hard Fork — also known as EIP -1559 — implemented in August 2021 fundamentally changed Ethereum's fee structure. The upgrade introduced a base fee that is burned and a priority fee that Vai as a tip for validators. Since the base fee is directly related to network usage, higher fees result in a larger amount of ETH being removed from the supply through burning.
Over the past week, Ethereum's supply has become inflationary, with a supply growth rate of 0.49%, in contrast to its previous deflationary nature, according to ultrasound.money . If activity increases and more ETH is burned than issued, it will return to deflation.
