The ETH burning mechanism appeared on August 5 of this year – since then, 1,237,000 coins have already been burned. That’s ~1% of all ETH issued in history.
The burning mechanism means that these coins have been permanently removed from circulation.
Why is this necessary?
Coin-burning is a defense against inflation. Unlike BTC, the maximum number of ETH in circulation is not limited. Every year there are more and more ETHs, which makes them subject to depreciation.
After Ethereum 2.0, the amount of ETH in circulation will decrease even faster, because the issue will decrease by about 90% (taking into account EIP-1559).
You can track the coin burn here: ultrasound.money
According to the website, switching to ETH 2.0 will achieve negative issuance: -2.4% per year. This means that the annual amount of coins burned will be greater than the amount of coins issued. Coin emission is not the only thing that affects the value of ETH. Pay attention to other factors as well.
Ethereum developers are actively testing the transition to Ethereum 2.0. They recently launched the Kintsugi test network, where developers can identify any potential problems to fix before the update is released.
ETH 2.0 will not only reduce emission, but it will also speed up the blockchain and reduce transaction costs.