When Ethereum implemented the London upgrade in August 2021, it introduced EIP-1559, which simplified the transaction fee mechanism and required the network to burn all ETH used to pay the base fee. The design purpose of this mechanism was to reduce inflationary pressure and potentially make Ethereum a deflationary asset during network activity peaks.
Single-Day ETH Burn Reaches Historic Low
However, according to The Block data, the Ethereum network burned only 53.07 ETH on Saturday, which at current prices is worth approximately $106,000, marking a historic low.
Meanwhile, according to Ultrasound.money data, if calculated at the burn rate of the past seven days, the annual supply growth rate of ETH is estimated to be 0.76%.
Such a low burn rate perfectly echoes the decline in other Ethereum activity indicators, such as the number of active addresses. According to The Block data, the seven-day moving average of active addresses has recently dropped to its lowest point since October 2024, with new address creation, transaction count, and daily transaction volume also declining in recent weeks.
Ethereum Foundation Considers Directional Adjustment
As Ethereum stagnates, Standard Chartered Bank recently significantly lowered its price prediction for Ethereum in 2025 from $10,000 to $4,000, citing the rapid growth of Ethereum's Layer 2 solutions in both quantity and scale.
Standard Chartered Bank noted in the report that Ethereum is currently at a crossroads. While several of its indicators still dominate the blockchain, this dominance is continuously diminishing. Ethereum's proud Layer 2 network, originally designed to enhance scalability, now appears to have reduced Ethereum's market cap by $50 billion, with just Coinbase's Base chain as an example.
To prevent this trend from continuing, Standard Chartered Bank believes the Ethereum Foundation needs to change its business direction, such as taxing Layer 2 networks. Additionally, if the tokenization market experiences significant growth, Ethereum might capture around 80% market share through its security, which could provide some support.
As Ethereum faces a trust crisis, Dragonfly managing partner Haseeb Qureshi recently revealed that the Ethereum Foundation is actively responding to community feedback and considering adjusting its operational direction. The leadership is seriously contemplating how to learn from other successful cases, particularly Solana's Superteam model, shifting focus from pure research to promoting project development and investment activities.
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