The Ethereum network is currently experiencing its lowest levels of ether (ETH) burn this year, with base gas fees hovering between 1 and 2 gwei. This sharp decline in fees has significantly reduced the amount of ETH being burned, impacting the overall issuance of the cryptocurrency.
On Saturday, only 210 ETH were burned, marking a new low for the year. In contrast, on August 5, when gas fees spiked to around 100 gwei, the daily burn rate surged to 5,000 ETH. The reduced burn rate has contributed to an increase in the network’s inflation rate, with net ETH emissions surpassing 2,100 ETH on Saturday, according to data from The Block.
In response to this inflationary trend, Gnosis founder Martin Köppelmann suggested that Ethereum might benefit from temporarily increasing the gas limit. He noted that the base fee, currently at a multi-year low of approximately 0.8 gwei, is insufficient to offset staking rewards. Köppelmann proposed that raising the gas limit could help stimulate Layer 1 (L1) activity, even if it seems counterintuitive given the low rates.
The reduction in gas fees is largely attributed to the growing adoption of Layer 2 scaling solutions and the implementation of blob transactions in the Dencun upgrade earlier this year, which have collectively helped lower costs on the Ethereum network.