The success of the PEPE meme coin has triggered a rapid burn rate on the Ethereum (ETH) network. Following the success of the meme coin, there have been others that have tried to copy and as more coins are released, the volume has followed, and the new proof of stake system of the Ethereum network has been thrown into overdrive when it comes to burning fees.
Meme Coins Trigger 37,000 ETH Burn
Meme coins have moved to the forefront of crypto over the last month and this increased volume has inadvertently led to a rise in the ETH burn rate. To put this in perspective, the data from Ultrasound Money – a website dedicated to Ethereum’s activities post-Merge – shows that a total of 561,656 ETH has been burned since the Merge occurred 231 days ago.
Zooming out to a shorter time frame of 30 days shows that over 130,852 ETH has been burned in the one-month period. This means that around 23% of the total burned ETH so far were burned in the last month, and this was triggered by the rise in activity in the network.
Basically, the more activity on the Ethereum network, the higher bids for block space. This is what translates to the increase in gas fees as users try to get their transactions confirmed fasted. The higher the bids for block space, the more ETH is burned. Rinse and repeat.
Gas fees lead to a higher burn rate | Source: Ultrasound Money
The largest of the burns have taken place on Uniswap, the largest decentralized exchange on the network. Ultrasound Money shows that approximately 32,800 ETH has been burned by transactions on the DEX in the last 30 days.
This accelerated burn rate has not slowed down either with more than 45,000 ETH burned in the last seven days. As a result, the burn rate now sits at 4.53 ETH per minute with an issuance offset rate of 3.47x.
Ethereum Continues To Dominate DeFi
The meme coin trend has always been led by Ethereum even back in 2021. This time was no different and the network is once again dominating the vast majority of the meme coin volume right now. As a result, the network’s 24-hour volume has climbed to $1.12 billion.
Ethereum is also the preferred network for a lot of new projects because of its volume with the likes of PEPE, WOJAK, and TURBO launching in the last month. These coins alone have done over $3 billion in cumulative trading volume and are climbing.
If the current trend continues and gas fees remain high, then ETH fee burns are expected to keep climbing. This would mean more ETH being taken 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