The excitement about the possible Ethereum ETF has caused a great increase in interest in Ethereum over the past several days. Among this buzz, Circle—the USDC stablecoin issuer—perversally deleted $60 million worth of USDC from the Ethereum blockchain network.
For Ethereum, Circle’s burning of USDC offers both a two-edged blade. Positively, because of perhaps less network congestion, fewer USDC tokens could equate to lower transaction fees and gas costs for every user. Everybody utilizing the ETH network would gain from this drop.
Ethereum Network Activity Declines
DeFi apps on the Ethereum network, which mostly depend on USDC for liquidity and stability, may have a drawback nevertheless. Burning USDC lowers the total pool of USDC accessible, hence possibly making it more difficult for DeFi apps to run without problems.
This could result in lower liquidity in some apps and more volatility in DeFi marketplaces, therefore affecting consumers depending on those services.Circle’s activities will not affect other stablecoins like DAI or USDT even if USDC is burning; users’ interactions with these coins will continue unbroken.
Regarding the condition of the Ethereum network, during the past few weeks daily active addresses have dropped noticeably. Additionally somewhat decreased on the ETH network is gas consumption. The declining enthusiasm in ETH NFTs is one of the causes of the declining activity on the network.
Based on data analysis of Santiment’s network NFT trading count has dropped. Popular ETH NFT collections such Mutant Ape Yacht Club (MAYC) and Bored Ape Yacht Club (BAYC) have seen notable drops in floor prices and trading volumes.
Leading the way in terms of NFT expansion are other networks including Solana and Bitcoin. Should this trend keep on, the whole ETH ecosystem may suffer. Reflecting a 1.83% drop over the past 24 hours, ETH is trading at $3,730.06 as of the latest figures. This price change emphasizes the present market volatility caused by both internal and external events impacting the network.
