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Half a million Ethereum have been burned on the Ethereum network according to the Etherchain website. At press time, the burnt amount equals $1.7 billion. Previously, the same amount of funds would have been received by Ethereum miners and most likely realized on the market.
Ethereum burning mechanism
With the EIP-1559 update, the fee-burning mechanism has been implemented to the Ethereum network. Since August, the miners' fee that was previously used to reward miners for moving transactions through has been changed to a base fee. Now, the reward for miners is presented as a tip, while the base fee is getting burned.
With an increased number of transactions on the Ethereum network every day, more coins are getting burned, which is progressively making Ethereum a deflationary asset with more coins burned than distributed.
Positive market effect
While the number of coins present on the network is constantly decreasing with the fee-burning mechanism present, it is expected to have a positive effect on Ethereum's price. With constantly reducing supply and rapidly rising demand, traders and investors tend to accumulate an asset while expecting a price increase.
The effect has already been reflected in Ethereum's price, with its 26% growth in October. Right after the update, Ethereum grew by more than 20% but then quickly retraced back to almost 30%.
At press time, Ethereum is trading around the price of $3,500 with 5% daily growth.