Ethereum is about to switch back to deflationary issuance. This usually happens when activity in the chain and gas consumption increase.
On-chain activity on the Ethereum network has increased over the weekend. The rise has resulted in more gas being used, which means more ETH is being burned. The ETH burning mechanism was introduced with EIP-1559 in August 2021.
According to the Ultrasound.Money tracker, the XEN token network is one of the highest gas consumers at the moment. In the last 24 hours, XEN has burned more than 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 (around 0.0011% per year).
What is XEN?
XEN Crypto is a project created by the “Fair Crypto Foundation.” It is supported by one of the first Google employees working on cloud infrastructure, Jack Levin.
The ethos aims to empower the individual with a token with no fixed supply or pre-mint and no CEX listings, 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. Furthermore, it can be claimed, stamped and bet by anyone. Judging by the gas consumption, there is still a lot of interest in the token and the project. However, the XEN price has fallen 98.7% from its launch price of $0.00037.
Regardless, XEN minting has pushed up gas prices and pushed down Ethereum issuance. As observed by analysts, the Ethereum deflation will be huge when activity on the chain picks up again.
The Ethereum venture is also gaining momentum. According to Beaconcha.in, 15.6 million ETH worth about $19.4 billion at current prices have been staked. In addition, the bet amounts to approximately 13% of the entire offer.
The Ethereum Shanghai upgrade is scheduled for March 2023. The upgrade will implement EIP-4895 which enables the withdrawal of staked ETH.
Ethereum Price Outlook
Despite Ethereum’s positive economic factors, ETH prices remain depressed. ETH reached $1,280 over the weekend but failed to overcome resistance above this level.
As a result, the asset has fallen back during Asian trading on Monday morning. ETH was trading down 2.2% on the day to $1,244 at the time of writing, according to CoinGecko.
Furthermore, the asset has been in range since the FTX collapse at the beginning of November. ETH is currently down 74.5% from its peak price of $4,878 in November 2021.
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