The success of the PEPE meme coin has led to a rapid burn rate on the Ethereum (ETH) network. After the success of the meme coin, there were others that tried to copy it and as more coins were released, volume followed, and the new proof of stake system of the Ethereum network was thrown into overdrive when it came to burning expenses.
Meme Coins Trigger 37000 ETH Burn
Memecoins have moved to the forefront of cryptocurrencies over the past month, and this increased volume has inadvertently sent the ETH burn rate soaring. To put this in perspective, the data from Ultrasound money A website dedicated to post-merger Ethereum activities showing that a total of 561,656 ETH has been burned since the merge occurred 231 days ago.
Zooming out to a shorter 30-day time frame shows that over 130,852 ETH has been burned in a one-month period. This means that about 23% of the total ETH burned so far has been burned in the last month, and this was triggered by an increase in activity in the network.
Basically, the more activity on the Ethereum network, the more block space is offered. This translates to increased gas fees as users try to confirm their transactions quickly. The more blocks space bids, the more ETH is burned. Rinse and repeat.
Gas fees lead to a higher burn rate | Source: Ultrasound Money
The biggest burns occurred on Uniswap, the largest decentralized exchange on the network. Ultrasound Money shows that nearly 32,800 ETH has been burned through transactions in DEX in the last 30 days.
This accelerated burn rate has not slowed down with over 45,000 ETH burned in the past 7 days. As a result, the burn rate is now 4.53 ETH per minute with an issuance compensation rate of 3.47x.
Ethereum continues to dominate DeFi
The meme coin trend has always been led by Ethereum even in 2021. This time was no different and The network again dominates the vast majority of meme currency volume now. As a result, the network’s 24-hour volume increased to $1.12 billion.
Ethereum is also the network of choice for many new projects due to its size with the likes of PEPE, WOJAK and TURBO launching in the past month. These coins alone have generated more than $3 billion in cumulative trading volume and are on the rise.
If the current trend continues and gas fees remain high, ETH fee burns are expected to continue to rise. This could mean taking more ETH out of circulation, which is very bullish for the price of ETH going forward.
Ethereum price recovers above $1,900 | Source: ETHUSD on TradingView.com