Users of the Avalanche ecosystem burned 439,000 AVAX (worth $16.7 million) last week, reducing the circulating supply. In the Avalanche network, similar to the Ethereum ecosystem, all transaction fees are burned. The transaction fees on the network are based on the EIP-1559 proposal, which introduced a fee-burning mechanism.
The difference between Ethereum and AVAX is that while the Ethereum ecosystem pays a portion of the transaction fee to validators and burns the rest, the Avalanche ecosystem burns both. The increase in burned transaction fees is noteworthy; while only a few thousand AVAX were burned each week between May 2022 and October 2023, a peak occurred in April 2023 with 39,000 AVAX burned in a single day.
The popularity of inscriptions, which started on the Bitcoin network and spread to Avalanche and other blockchain networks, constitutes a significant portion of this substantial increase in burned transaction fees. According to Dune Analytics data, over 75% of the transaction fees paid and burned on Avalanche last week were related to inscription transactions.
Tokens based on inscriptions are created by writing code into ordinary blockchain transactions and using an external numbering system. They were introduced as a temporary solution due to the lack of native token support on the Bitcoin network. This trend quickly spread to other blockchain ecosystems due to their low costs and revolutionary nature in the blockchain space.
To date, a total of 3.4 million AVAX, amounting to $129 million at current prices, have been burned through transactions on the Avalanche network.
