Everything is Fine
ETH didn't start the fire
Welcome to this week’s Unsydicated. As a reminder, I’ve recently switched my newsletter from Substack to Revue since it integrates directly with my hobby addiction, Twitter.
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"Burning Up" - Nick Jonas
Ethereum proceeds to gain adoption across a variety of sectors. With its growth so continues the burning of ETH. The ethereal fire rises.
Four months ago on August 4th, EIP-1559 went live which altered Ethereum’s transaction fee system. EIP1559 reformed the Ethereum fee market, creating a “base fee” – minimum price per unit of gas – that dynamically changes based on network activity.
Ethereum base fee burns hit an all-time high in November with just over 360K ETH burned. The ETH burn rate has continued a 19% month-over-month growth rate over the past two months.
OpenSea currently accounts for the largest percentage of ETH burns (~117k ETH) with ETH transfers (transfers of ETH on the network) coming in second (105K) and Uniswap V2 (100k) coming in third.
Ethereum net issuance continues to decline with only ~37K ETH issued in November.
At this rate, if market demand continues, Ethereum may see its issuance become deflationary relatively soon. While the thought of Ethereum becoming a deflationary asset shows promise for Ethereum from an investment perspective, increasing gas prices limit network usage to those with significant capital. However, this isn’t necessarily all negative as major institutions will likely be willing to pay the Ethereum gas prices in exchange for fast settlement (compared to the legacy market) and reducing counterparty risk.
Still, ultimately Ethereum activity will need to transition to Layer-2s in order to enable greater consumer adoption for non-institutional clients.
Curated Content
Watch the burn – Great real-time website to watch ETH burns
Gringotts DAO – an NFT DAO (bank) focused on providing NFT loans
Near launches $350M DeFi Grants DAO
BadgerDAO gets exploited for $115M. oof.
Protocol TVL from the start of the year to the end.
Our Network Dune lectures for anyone looking to get up to speed.
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