- Ethereum recorded negative daily net issuance for the first time on Friday, The Block data shows.
- Analysts said a boom in NFTs was pushing up use of the network – leading to more tokens being burned.
- A network overhaul in August led to some of each transaction fee being “burned”, or destroyed.
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More ether was burned than created on Friday, the first time daily net issuance has been negative on the ethereum network.
The negative issuance is a result of the overhaul of the ethereum network that came into force in early August, which “burns” or destroys part of the fee that users pay to have their transactions verified.
Data from The Block’s ether dashboard showed that issuance was -334 on Friday, after 13,840 ether were burned but 13,506 were created. One ether was worth $3,940 on Monday.
Stan Kladko, cofounder of ethereum development company Skale Labs, told Insider a surge in interest in non-fungible tokens was causing record amounts of ether to be burned.
Strong interest in NFTs – which largely run on ethereum – have been driving up activity and transaction fees on the network, Kladko said.
Since the August network upgrade, codenamed EIP-1559, part of each transaction fee has been burned, as a result of technical changes that aim to make fees more predictable for users.
The changes mean that more activity and higher fees leads to more ether being burned. On Friday, the amount of ether burned was more than was created and given to “miners” as a reward for validating transactions.
The 13,840 ether burned on Friday was a record amount and was up from 11,130 a week earlier.
Lex Solokin of ethereum development company ConsenSys said it was unlikely that net issuance would be persistently deflationary.
“We would expect low inflation rather than ongoing deflation,” he told Insider. “But in the short term, demand is likely to remain high as new industries and markets shift to mainnet.”