Ethereum and XRP transaction fee burns have not reduced circulating supply as intended, undermining a key value proposition for investors.
Ethereum and XRP have destroyed portions of transaction fees for years, yet neither has seen meaningful supply reduction. Ethereum’s circulating supply has grown by over 950,000 ETH since September 2022 despite its burn mechanism, while XRP has burned just 14 million tokens—0.01% of its 100 billion maximum supply—over 13 years.
Ethereum’s EIP-1559 upgrade in 2021 introduced fee burns to create scarcity, initially outpacing new issuance. However, the March 2024 Dencun upgrade disrupted this balance. XRP’s burns, meanwhile, were never designed to reduce supply but to manage transaction costs, limiting their impact on token value.
The discrepancy between intended and actual outcomes raises questions about the long-term efficacy of burn mechanisms as a value driver for these assets.