In the past 2 months, 0.5% of all $ETH.X has been burnt due to EIP-1559. This will accelerate once Ethererum exits proof-of-work mode and enters proof-of-stake (see below courtesy of ultrasound.money)). As DeFI increases adoption (approaching $100 billion of total value locked), this accelerating reduction in supply will continue to increase ETH prices.

10% of all Americans hold crypto (a 12 year old asset class) vs 55% of Americans hold stocks (a 100+ year asset class).
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sam stribling's avatar
@techinvestor so I have heard of this type of concept but truthfully find myself a bit lost in the weeds.. I have crypto exposure via $GBTC (grayscale Bitcoin trust) which has been great! I totally get that scarcity leads to price appreciation but how does this play out over the long term? Does it just reduce supply indefinitely? Any help understanding this would be appreciated!
Eric Pelnik's avatar
@mikemcg has written some quality memos on his profile about ETH. They may help you get a better grasp of things.
Conor Mac's avatar
“0.5% of all $ETH.X has been burnt due to EIP-1559.” what does this mean, explain it like i am 5?
eCom / SaaS / Crypto's avatar
Hi @investmenttalk and @strib: After a feature upgrade this summer to $ETH.X (the release was codenamed EIP 1559), anytime there is a transaction (think of all the NFTs bought/sold on Opensea for example), a portion of that transaction is permanently removed from supply (known as a gas fee).

Therefore vs $BTC.X where the supply is fixed, Ethereum supply will start decreasing over time.

Here's more in case you're interested (note how the amount of ETH burnt doubled since article publication just a month ago):

Conor Mac's avatar
@techinvestor great explanation, thank you
sam stribling's avatar
@investmenttalk glad I’m not the only one lol 😂
Celine Romero's avatar
Would like to hear more detail on @strib's question about indefinitely reducing supply. Over the long term, doesn't that mean that supply will start approaching zero? What use is it if there's only a small amount around and the rest as been burned?

If the answer that ETH is somehow infinitely divisible... isn't that another way of saying there is infinite supply?
Nathan Worden's avatar
It’s hard to come up with an investment thesis with more upside over the next 12 months.

@techinvestor, how much execution risk do you ascribe to the merge?
eCom / SaaS / Crypto's avatar
Bullish: EIP 1559 was the first step and working. The merge isn't a hard event, but a rather a series of milestones starting in Q1 / Q2 22 that I have been tracking here: https://ethereum.org/en/eth2/merge/

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