Can Memecoin Frenzy Boost Ethereum’s Deflationary Ambitions?
A rising concern over the dwindling network activity and deflationary dynamics of Ethereum has paved the way for a new contender to invigorate Ethereum’s burning mechanism. Ethervista, a recently unveiled platform drawing inspiration from Solana’s Pump.fun and Tron’s SunPump, has swiftly ascended to become the second-largest burner of ETH in the past seven days.
Ethervista offers users the opportunity to craft and exchange memecoins on the Ethereum network, featuring adaptable fee configurations and a stipulation that locks funds for five days to deter swift withdrawals.
In the last week, Ethervista has incinerated 168 ETH (equivalent to $375,000 at current rates), representing over 8% of the total 2,026 ETH burned across the network, as indicated by data from the Ultrasound Money dashboard. This positions Ethervista closely behind Uniswap in the ETH burning hierarchy. Notably, the platform has facilitated $63 million in trading volume and $32,000 in fees within the preceding 24 hours, according to DefiLlama.
EIP-1559, introduced in 2021, ushered in Ethereum’s burning mechanism, which involves burning a segment of the transaction fees (referred to as the base fee) with each network transaction. This process curtails the overall ETH supply, exerting deflationary forces on the asset. With heightened transaction volumes, particularly during periods of elevated network activity, more ETH is burned, effectively extracting it from circulation. The primary goal of this mechanism is to stabilize the supply of ether by offsetting inflation stemming from the issuance of new ETH through staking rewards.
The debut of Ethervista on Sept. 1 coincides with a noticeable decline in fees for Tron’s SunPump. According to DefiLlama, Ethervista has amassed $242,000 in fees since its launch. Meanwhile, Sunpump’s daily fees have witnessed a significant drop, plummeting from as high as $260,000 in a single day last week to approximately $50,000 daily this week.
The native token of Ethervista, $VISTA, presently holds a market cap of $20 million. With a fixed supply of one million tokens, each transaction on the platform triggers an on-chain burn, progressively reducing the total token supply. This mechanism is crafted to enhance scarcity and potentially propel the token’s value over time.
The sustainability of Ethervista’s burning trend and its ability to retain its position amidst the memecoin frenzy that originated on Solana earlier this year remains to be observed.
