When the “EIP-1559” upgrade was introduced to Ethereum last month, it was supposed to slow the growth rate of Ethereum supply.

But over the past 48 hours, the supply of Ethereum hasn’t grown at all, it’s been shrinking due to the constant burning.

Ethereum has burned more of its coins on the network than it has been minted over the past 24 hours, which means that there is less Ether available today than there was yesterday.

Ethereum experts believe this is the first time this has happened.

The “EIP-1559” upgrade was a proposed coding change to Ethereum that allowed block sizes to be expanded so that more transactions could be sent across the network.

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The Ethereum network has suffered from congestion thanks to the popularity of NFT and decentralized finance applications such as the Aave lending protocol and Uniswap, as these tools use limited network resources.

Part of the proposal was to charge a base fee for each transaction.

Instead of continuing to pay the fee to miners who validate network transactions, the core fee will be burned (i.e. taken out of circulation by sending it to an inaccessible wallet).

The idea was to reduce the total supply of Ethereum, and unlike Bitcoin, Ethereum does not have a final cap.

As a result, the price of Ethereum will theoretically increase as a result of the demand.

While EIP-1559 reduces the rate at which the supply of Ethereum is growing, it does not necessarily reduce the supply of Ethereum.

This is because, with every block produced, miners can still hold the newly minted Ethereum.

As long as the amount of freshly mined ETH is above the burnt core fee, the overall supply of Ethereum increases.

But that is no longer the case, at least in the past 24 hours.

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In the 24-hour period spanning Thursday and Friday, supply growth turned negative.

13,000 ETH was burned which is more than 12,500 ETH that was issued to miners.

This can happen when the underlying fee is revised upward during periods of high demand for Ethereum transactions.

Meaning when the activity of decentralized finance transactions and non-fungible tokens increases, fees rise, a large part of which is burned, which contributes to an increase in the burned digital currencies at the expense of the digital coins.

This is the first example of Ethereum turning into deflation, Scott Lewis, co-founder of DeFi Pulse told.

Ethereum is approaching its first day of contraction pic.twitter.com/4ULIbLt5aD

– 𝚂𝚌 𝚂𝚌_𝙻Ξ𝚠 𝙻Ξ𝚠 Share 🌾 (scott_lew) September 3, 2021

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Since the code change went into effect on August 5, more than 190,000 ETH has been burned, according to Ultrasound money..

According to Nomics, this is the equivalent of $736 million.

Recently, the price of Ethereum went from $2,516 on August 4 to $3,940 today, an increase of 56% in one month.

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