ETH burn rate drops to lowest levels as gas fees hover at 2 gwei

Reported by The Block: The daily amount of ETH burned on the Ethereum network has reached its lowest level in the past few years.

Gas fees are ranging between 1 gwei and 2 gwei currently, affecting the issuance of ETH.

Only 210 ETH were burned on Saturday, while the net ETH emission exceeded 2,000 ETH due to low gas fees.

The daily amount of ETH burned on the Ethereum network has fallen to its lowest level this year, with base fees currently hovering between 1 and 2 gwei at the time of writing.

This decline in base gas fees represents some of the lowest levels observed in recent years, consequently impacting ETH issuance.

Only 210 ETH were burned on Saturday, marking a record low for the year, as gas fees remained minimal. In contrast, on August 5, the daily burn surged to 5,000 ETH when gas fees reached about 100 gwei.

With such low gas fees, the network's inflation rate has increased. While 210 ETH were burned, the net ETH emission was reported at over 2,100 ETH on Saturday, according to data from The Block.

Given this inflationary trend, Gnosis founder Martin Köppelmann has suggested temporarily increasing the gas limit. “The base fee is at a multi-year low of ~0.8 GWEI. 23.9 would be required to offset staking rewards. In my opinion, Ethereum needs to increase L1 activity again, and even if it sounds counterintuitive at such low rates, raising the gas limit can be part of a strategy,” he noted.

The London hard fork, also known as EIP-1559, implemented in August 2021, introduced a burned base fee and a priority fee that serves as a tip for validators. As the base fee correlates directly with network activity, higher fees result in more ETH being burned, thus reducing the supply.

This decrease in gas fees is attributed to increased user migration to Layer 2 scaling solutions and the adoption of blob transactions introduced in the Dencun upgrade in March, which have helped reduce costs on Layer 2 networks.

ETH is changing hands at $2,540, up nearly 10% year-to-date at a market cap of $305 billion, according to The Block's price page.