Ethereum's on-chain activity has significantly decreased recently, with the daily ETH burn rate reaching an all-time low of just 53.07 ETH (~$106K USD) on March 22.
Introduced in August 2021 through EIP-1559, Ethereum's fee-burning mechanism was designed to:
- Simplify transaction fee structures
- Automatically burn "Base Fees" to reduce ETH inflation
- Potentially turn ETH into a deflationary asset during peak network activity
However, the current burn rate reflects plummeting demand for Ethereum block space. According to Ultrasound.money, ETH's annual supply growth now stands at 0.76%—far from the deflationary target.
Key On-Chain Metrics Show Downtrend
1. Active Addresses
- 7-day moving average at lowest since October 2024
2. Network Growth
- New addresses creation slowing
- Daily transaction count & volume declining sharply
3. Institutional Sentiment Shift
👉 Standard Chartered slashes ETH price target from $10K to $4K for 2025, citing:
- Rising competition from L2 solutions (Arbitrum, Optimism, Base)
- Reduced mainnet profitability as fees migrate to scaling layers
FAQ: Understanding Ethereum's Current State
Q: Why does low ETH burn matter?
A: It indicates reduced network usage—fewer transactions mean fewer fees burned, increasing ETH's circulating supply.
Q: Are L2s harming Ethereum?
A: While they divert fee revenue, L2s enhance scalability. The long-term impact depends on Ethereum's ability to monetize these layers.
Q: Should investors be worried?
A: Market cycles are normal. Focus on Ethereum's tech upgrades (e.g., Dencun) and adoption metrics rather than short-term fluctuations.
Keywords: Ethereum burn rate, EIP-1559, ETH inflation, L2 solutions, Standard Chartered ETH forecast, on-chain activity
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