Over $100 million worth of the second-largest digital currency by market capitalization Ethereum ($ETH) have been burned since the cryptocurrency’s network transitioned from a Proof-of-Work (PoW) consensus algorithm into a Proof-of-Stake (PoS) consensus algorithm.

The cryptocurrency’s deflationary trend has been growing over time, with its supply having dropped by over 64,457 ETH since the network’s merge upgrade over 180 days, to the point there are now 120,456 ETH circulating on the market.

According to data from Ultrasound.money, Ethereum’s supply has been dropping by 0.1% per year since the Merge, while without it, it would be rising at a rate of 3.42% per year.

 The website’s projections suggest Ethereum’s supply could drop to 117 million ETH by 2025, with issuance rewards for stakers on the network being expected to be about 4% per year. A significant portion of the ETH burn resulting in the decrease in supply can be attributed to transfers from major DeFi applications, including Uniswap, Tether, and other projects burning tokens through transaction fees.

Ethereum transactions started burning ETH after the London hard fork, which included the implementation of Ethereum Improvement Proposal (EIP) 1559. The EIP changed the way transaction fees on the network work. Instead of an auction system, users now pay a base fee for their transaction to be processed by validators, and can alternatively tip them to get their transactions to be processed faster.

Ethereum staking has been seen a source of revenue for both cryptocurrency holders and exchanges. These platforms offer users a staking service allowing them to maintain liquidity through a separate token while locking their ETH on-chain to earn rewards, and collect a potion of the rewards in exchange.

Nasdaq-listed cryptocurrency exchange Coinbase has, for example, reported revenue of over $200 million in the fourth quarter of last year through its staking, earn, and custody products.

Notably, Ethereum’s highly anticipated Shanghai upgrade is one step closer to being activated on the network’s mainnet, following a final dress rehearsal that was carried out on the Goerli testnet, which involved a simulation of staked ETH withdrawals.

Once activated, the upgrade will complete Ethereum’s full transition to a proof-of-stake (PoS) network, allowing validators to withdraw their staked ether and rewards earned from adding or approving blocks.

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