Gas fees are trending down
As of two weeks ago, Ethereum’s gas fees are down 35% as developers continue to upgrade the network under its ETH2.0 development plan. That plan will also boost transactions per second to more than 100,000, which is intended to further reduce transaction costs, chronic network congestion, and settlement delays.
Ethereum continues its deflationary drive
According to Ethereum tracking website, UltraSound.money, a total of $1.079 billion of Ethereum (ETH) fees were burned during January — setting a single month record. A “fee burn” is an automated “self-destruct” mechanism which removes from the circulating supply of coins a certain percentage of ETH. These fees were previously used to pay ETH miners as reward for their “proof-of-work” protocol as they validated transactions on the Ethereum blockchain.
The fee burn started Aug. 5, 2021 as a key first step toward upgrading the Ethereum network to a more efficient “proof-of-stake” consensus model, following the activation of EIP-1559. The burn feature is an intentional effort to reduce the overall circulating supply of Ethereum as a way to make that particular coin increasingly valuable, using basic supply and demand principles.
Through the end of last year, the project had removed more than 1.5 million ETH from circulation — the equivalent of $4.5 billion U.S. dollars.
Ethereum is THE backbone of popular NFT and DeFi activity
It’s worth noting that the more than $1 billion in burned Ethereum last month was totally transactional gas fees, which means a lot of transactions took place on that blockchain. The overwhelming majority of those transactions took place on the leading NFT marketplace, OpenSea. OpenSea set a new single month revenue record in January of more than $5 billion in NFT transactions — most of which occurred on the Ethereum network.
The OpenSea revenue record reinforces the fact that Ethereum is still the primary network for decentralized finance (DeFi) and non-fungible token (NFT) exchanges and transactions. DeFi currently has $100 billion in locked assets on the ETH blockchain, with more pouring into this automated banking system. And NFTs continue their explosive growth with all-time sales of $20.8 billion according to nonfungible.com as of this writing.
How high can ETH fly this year?
The ETH project is well positioned to continue to benefit from these trends in 2022. It’s currently trading at $3,058 a 36% discount off its all-time high, and it could double or triple that price this year. Last year, it had a 450% return, so it’s certainly possible given its use cases and positive prospects. However, hitting $10 thousand per coin is unlikely given the current macro conditions within the space and overhang of possible crypto regulation.
Be sure to keep an eye on ETH as it could surprise us all — in a good way!
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Source: Cryptocurrency - investing.com
