Ethereum Burn Rate Hits All-Time Low, Signaling Drop in Network Demand

Ethereum network activity has hit a new low, with just 53.07 ETH (worth approximately $106,000) burned on Saturday, marking the lowest daily burn since the introduction of its fee-burning mechanism under EIP-1559.

The decline points to a sharp reduction in demand for Ethereum’s blockspace.

The EIP-1559 upgrade, implemented in 2021, aimed to simplify transaction fees and reduce ETH supply by burning the base fee in each transaction.

During periods of high usage, the EIP-1559 mechanism can make Ethereum deflationary. However, current network conditions suggest otherwise.

Based on recent data from Ultrasound.money, Ethereum’s supply is now expected to grow by 0.76% annually.

The low burn rate aligns with falling on-chain activity.

Metrics such as active addresses, new address creation, transaction count, and daily trading volume have all seen significant drops in recent weeks.

The seven-day moving average of active addresses recently dipped to its lowest level since October 2024.

Meanwhile, Ethereum’s transaction fees have also plummeted to their lowest level since late August, averaging just $0.41 per transfer.

The significant decrease marks a stark contrast to the $15.21 high seen in the past two years, indicating potential bullish sentiment for Ethereum’s long-term price outlook.

These trends raise concerns about slowing user engagement on Ethereum, especially amid growing competition from Layer 2 networks and alternative blockchains offering lower fees and faster transactions.

Ethereum burn rate hits a record low: only 53 ETH (~$106K) removed from circulation on March 22. Network activity is slowing too, with active addresses and transactions dropping to multi-year lows. #Ethereum #Crypto pic.twitter.com/eDvz8JM4Vf

As reported, Standard Chartered has also significantly revised its 2025 price forecast for Ethereum, cutting it from $10,000 to $4,000 amid the rapid expansion of Layer 2 networks.

According to Geoffrey Kendrick, the bank’s global head of digital assets research, platforms like Base are now generating substantial profits from within the Ethereum ecosystem, contributing to the revised outlook.

Instead of supporting ETH’s price, the adoption of L2 networks has shaved off $50 billion from its market capitalization.

Standard Chartered expects this trend to continue, further diminishing Ethereum’s influence.

Despite the drop in demand for the Ethereum network, the blockchain is still the top choice for asset tokenization, with over $3.3 billion in tokenized assets.

More recently, Fidelity Investments filed to register a tokenized version of its US dollar money market fund on Ethereum.

The move aligns the $5.8 trillion asset manager with industry giants like BlackRock and Franklin Templeton, both of which are exploring real-world asset (RWA) tokenization.

Furthermore, a significant on-chain metric supporting ETH’s long-term bullish case is its rapidly declining exchange supply.

As of now, only 6.38% of Ethereum’s total supply remains on centralized exchanges, marking the lowest level since its inception.

This trend suggests that investors are moving ETH into cold storage, a signal that they intend to hold rather than sell.

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