Ethereum, one of the best performers ahead of the highly anticipated Ethereum Merge, has had a poor show since the event. The Merge had been implemented without a hitch, transitioning the largest smart contract platform in the world from a proof-of-work consensus mechanism to a proof-of-stake one, and in one fell swoop making it 99.95% more eco-friendly and open up the road to make it a truly deflationary asset.
According to recent data from ultrasound.money, Ethereum has dropped over 4000 ETH tokens from its supply, with the supply having fallen from nearly 13,000 ETH to around 8500 as of now in the past three days alone. Along with that, Ethereum’s gas prices also spiked from
However, despite this major chunk of Ethereum’s circulating supply being taken off the market – its native token ETH’s value saw very little change, if any. Whenever a crypto has a limited supply of tokens that can ever exist, or has a supply that is being continuously burnt over a period of time, it is called as a deflationary crypto. And whenever this happens, by simple economic principles, the value of that asset increases. However, in this case, Ethereum price has managed to only lose about 4% in the same timeframe instead of gaining.
This could be a possible result of the overhanging bearishness in the crypto market amidst all the fear, uncertainty and doubt all around.
Additional Read: Ethereum Price Prediction
Now let’s analyse what triggered this sudden bout of deflationary action in the Ethereum network. A closer look at data from Etherscan.io has shown that this sudden uptick in network fees aka gas fees on the Ethereum network has shot up to 23 gwei as of writing. This is primarily due to a new project called XEN crypto that was launched that accounted for nearly 40% of all the transactions on the network.
XEN is over 40% of all Ethereum Transactions. pic.twitter.com/Y5HO5MLN9U
— XEN Crypto Official (@XEN_Crypto) October 8, 2022
And even according to press time, data from etherscan.io shows that even almost two days later, XEN crypto alone is the single largest gas guzzler on the Ethereum network, responsible for almost 31% of all gas consumed on the network.
XEN, a crypto token built by an early Google engineer and a popular crypto influencer Jack Levin, defines itself as a “universal crypto” with “no intrinsic value” that will accumulate worth “as more and more people join and participate in minting.” This token debuted on Sunday, 9 October 2022 and was completely free to mint. Users only had to pay for the gas fees to mint a XEN crypto token.
This is your knowledge base to everything XEN:https://t.co/OraJk4yroB
— XEN Crypto Official (@XEN_Crypto) September 28, 2022
A lot of users came into the network to mint this particularly new token that resulted in an unusually high uptick in activity on the network that resulted in skyrocketing Ethereum gas fees which resulted in an aggressive burning of ETH tokens and burnt over 4000 ETH tokens worth over $5 million as of writing.
XEN’s price action has been somewhat of an anomaly and it is trying to bring about a new concept in the crypto world. But apparently it is receiving a lot of attention despite the bear market and would be good to keep an eye out for it.