Ethereum is about to switch back to deflationary issuance. This generally happens when activity in the chain and gas consumption increase.
On-chain activity on the Ethereum network increased over the weekend. The upswing has led to more gas being used, which means more ETH being burned. The ETH burning mechanism was introduced in August 2021 with EIP-1559.
According to the Ultrasound.Money tracker, the XEN token network is currently one of the largest consumers of gas. In the past 24 hours, XEN has burned over 210 ETH or about $260,000.
This is more than the gas consumption of OpenSea, Tether and Unisoft. As a result, Ethereum issuance is close to zero (about 0.0011% per year).
What the XEN?
XEN Crypto is a project of the “Fair Crypto Foundation”. It is supported by one of the first employees at Google to work on cloud infrastructure, Jack Levin.
The ethos is to empower the individual with a token with no fixed supply or pre-mint and no CEX entries, admin keys or immutable contracts. However, several observers have pointed out that the Ponzi-type economy shares similarities with the HEX token.
XEN was launched in early October. Moreover, it can be claimed, minted and staked by anyone. Judging by the gas consumption, there is still a lot of interest in the token and the project. However, the XEN price is down 98.7% from its launch price peak of $0.00037.
Either way, the XEN minting has driven gas prices up and Ethereum issuance plummeted. As observed by analysts, Ethereum deflation will be massive once on-chain activity picks up again.
Ethereum staking is also gaining momentum. According to Beaconcha.in, 15.6 million ETH have been staked worth about $19.4 billion at current prices. In addition, the amount wagered represents approximately 13% of the total supply.
The Ethereum Shanghai upgrade is scheduled for March 2023. The update will implement EIP-4895, enabling withdrawal of staked ETH.
Ethereum Price Outlook
Despite Ethereum’s positive economics, ETH prices remain low. ETH reached $1,280 over the weekend but failed to overcome resistance above this level.
As a result, the asset fell during Monday morning’s Asian trading session. ETH was trading 2.2% lower at $1,244 at the time of writing, according to CoinGecko.
In addition, the asset has been range-bound since the FTX collapse in early November. ETH is currently down 74.5% from its peak price of USD 4,878 in November 2021.
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