ETH Daily Burn Rate Hits Yearly Low
Since the London Upgrade in August 2021, Ethereum implemented the ETH burn mechanism through EIP-1559 to optimize transaction fees. This upgrade split gas fees into two components:
- Base fee: A mandatory payment that gets burned (not awarded to miners)
- Priority fee: A dynamic tip incentivizing miners during network congestion
Recent data from The Block reveals that ETH's daily burn rate dropped to 946.63 ETH on August 18, 2023—the lowest point this year and a two-year low post-EIP-1559 implementation.
Key Factors Reducing ETH Burn Rate:
Shift to Layer 2 Solutions: Base (Coinbase's L2), Optimism, and other scaling solutions are diverting activity from Ethereum's mainnet.
- Base alone has attracted **$236M in assets**, including $144M worth of ETH since launch.
- Base processes ~5 transactions/second (comparable to Optimism), trailing only Arbitrum One and zkSync Era in throughput.
- Upcoming ZK-Rollups: Projects like zkSync and StarkNet—still in development—are drawing user attention due to anticipated airdrops for early testnet participants.
👉 Discover how Layer 2 solutions are transforming Ethereum scalability
ETH Staking Trends Post-Shanghai Upgrade
The Shanghai Upgrade (enabling staking withdrawals) significantly boosted ETH staking participation:
- Total staked ETH: 23.72M (19.44% of circulating supply)
- Net growth since Shanghai: +6.28M ETH
- Current staking APR: 4.97% with 740K active validators
Notably, daily withdrawal volumes have declined despite recent market downturns, indicating sustained validator confidence.
Ethereum Development Updates
New Testnet: Holesky
- Launching September 2023 with 1B+ testnet ETH to facilitate developer access
- Purpose: Replaces Goerli for staking/protocol testing while Sepolia remains focused on Dapps/EVMs
Ethereum Futures ETF Developments
- SEC Approval Expected: Multiple ETH futures ETFs may launch by October 2023 (e.g., Volatility Shares' October 12 target)
- Key Applicants: Bitwise, Roundhill, ProShares among ~12 firms
Whale Activity and Market Sentiment
- Whale Sell-Off: Addresses holding 10K–100K ETH reduced holdings by 4% (1.12M ETH) between July 14–August 18.
- Strategic Buys: Three historically profitable "smart whale" addresses acquired ETH at ~$1,680 (RSI <30), potentially anticipating ETF approvals.
👉 Learn how institutional interest could reshape ETH's valuation
FAQ Section
Q: Why is ETH's burn rate declining?
A: Increased Layer 2 adoption reduces mainnet transactions, lowering ETH burns. Projects like Base and zkSync handle activity off-chain.
Q: What’s driving ETH staking growth?
A: The Shanghai Upgrade mitigated withdrawal risks, encouraging more validators despite market volatility.
Q: How might Ethereum futures ETFs impact ETH?
A: SEC approval could legitimize ETH as an institutional asset class, though whale behavior suggests cautious optimism currently.
Analysts suggest Ethereum's upcoming Cancun Upgrade and ETF prospects may provide stronger support compared to Bitcoin in current market conditions.