\n<\/p>\n
As global financial institutions wrestle with record levels of inflation, Ethereum is facing an inverse dilemma.\u00a0<\/span><\/p>\n Since Saturday, ETH supply has dropped by over 4,000 tokens, according to data from <\/span>ultrasound.money<\/span><\/a>, but saw no corresponding price boost. ETH\u2019s price, despite a lowered supply, <\/span>has fallen some 3.6%<\/span><\/a> in the same period, to $1,307 at writing.<\/span>\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0<\/span><\/p>\n The turn marks the first deflationary run\u2014where more ETH is destroyed than created\u2014since the Ethereum network\u2019s <\/span>landmark move to prove of stake<\/span><\/a> in September.<\/span><\/p>\n All Ethereum transactions require so-called gas fees, which increase Ethereum\u2019s security by preventing the network from being overloaded with malicious requests. The greater the traffic on the Ethereum network at a given time, the higher gas fees will soar.\u00a0<\/span><\/p>\n Gas fees are pocketed by the validators who process all ETH transactions. Since the debut of a network upgrade called EP-1559 <\/span>last August<\/span><\/a>, however, a portion of every gas fee has also been destroyed, to automate transaction prices and limit the supply of ETH.\u00a0<\/span><\/p>\n Beginning Saturday, the cost and volume of gas fees started burning more ETH than was being concurrently created via staking\u2014the post-merge process <\/span>by which ETH is now generated<\/span><\/a>. Since then, the total amount of ETH in circulation has dropped by 4,001 ETH and counting, with the rate of burning still continuing to outpace the rate of ETH creation.\u00a0<\/span><\/p>\n Average gas fees on the network have meanwhile <\/span>spiked 218%<\/span><\/a> since Friday, to a current average of 35 gwei, and show no sign of letting up.\u00a0<\/span><\/p>\n <\/p>\n The source of the irregular uptick in Ethereum traffic\u2014and thus spike in gas fees\u2014that prompted ETH\u2019s deflation appears to be a novel token project called XEN Crypto. XEN Crypto transactions account for 40% of all gas used network-wide in the last 24 hours, according to data from <\/span>etherscan.io<\/span><\/a>.\u00a0<\/span><\/p>\n XEN, a cryptocurrency created by early Google engineer and crypto influencer Jack Levin, <\/span>defines itself<\/span><\/a> as a \u201cuniversal cryptocurrency\u201d with \u201cno intrinsic value\u201d that will accumulate worth \u201cas more and more people join and participate in minting.\u201d<\/span><\/p>\n The token, which debuted this weekend, started with no supply, but was free to mint (users only had to pay ETH gas fees to generate XEN tokens).\u00a0<\/span><\/p>\n On Sunday morning, the token\u2019s price rocketed from a fraction of a cent in value to $1.04. Within five minutes, XEN crashed back down to slightly less than a cent, before plummeting again to a near-zero fraction of a cent, where the token\u2019s value has since remained.\u00a0<\/span><\/p>\n In the last 24 hours, XEN minters paid <\/span>almost $2 million in gas fees<\/span><\/a> to generate the novel and now functionally worthless token.\u00a0<\/span><\/p>\n On Twitter, observers soon began labeling the token launch a Ponzi scheme.\u00a0<\/span><\/p>\n 30% of net ETH issued gone in the past few days mostly thanks to XEN.<\/p>\n Lessons: \u2014 mhonkasalo (@mhonkasalo) October 10, 2022<\/a><\/p>\n<\/blockquote>\n<\/div>\n i mostly find XEN interesting because<\/p>\n 1) its a ponzi that relies on people believing in whatever this is and continually buying into the token \u2014 Sisyphus (@0xSisyphus) October 10, 2022<\/a><\/p>\n<\/blockquote>\n<\/div>\n \u00a0<\/p>\n XEN\u2019s litepaper specifically critiques tokens that encourage \u201cpumping and dumping,\u201d and alleges that XEN\u2019s tokenomics will solve this problem. Because no pre-existing supply of XEN was initially distributed to the token\u2019s creators, the litepaper argues, it operates on a \u201cfair system.\u201d<\/span><\/p>\n \u2026aims to empower the individual\u2026<\/p>\n No pre-mint 100% Transparent and on chain pic.twitter.com\/l84HsePMh3<\/a><\/p>\n \u2014 Jack Levin (@mrJackLevin) August 13, 2022<\/a><\/p>\n<\/blockquote>\n<\/div>\n Levin, the token\u2019s creator, did not immediately respond to <\/span>Decrypt<\/span><\/i>\u2019s request for comment.<\/span><\/p>\n\n
– A few clever ponzi schemes & there’s no ETH left.
– If you burn ETH supply, holders are much slower to criticize. pic.twitter.com\/DrxOg0bTwS<\/a><\/p>\n\n
2) its making eth deflationary
3) the usual suspects who i would have expected to be sybilling this aren’t<\/p>\n\n
No Admin Keys
Immutable Contract
No listings on CEXs
Starts with zero supply<\/p>\n