"Hmm, why does KuCoin act like that?"
In September 2021, thousands of deposit addresses from cryptocurrency exchange KuCoin reportedly sent tens of millions of dollars worth of Ethereum (ETH) to addresses that burned for no apparent reason.
According to Conor Grogan, Director of Coinbase said that the extraordinary event that lasted for three days starting on September 7, 2021 involved more than 3,500 transactions in stablecoin Tether (USDT) and ETH.
There is no denying that token burning is a common practice, but not for this situation as there is such a large quantity of ETH to be burned in a short period of time with no apparent reason behind the move.
Therefore, Grogan is of the view that KuCoin may make an agreement with BitFinex to redeem USDT, but keep in mind that ETH has implemented an upgrade called EIP-1559 in 2021 to introduce a mechanism that can burn part of the gas fee.
Coupled with the Merge upgrade that saw ETH move to Proof-of-Stake (PoS) further saw the supply of the digital asset decrease compared to the transaction fees paid.
For the record, the supply of ETH in May 2023 has decreased by 143,000 ETH worth $275 million after 56,680 of the digital asset was issued and 199,670 were burned, but many investors believe that the price could rise in the future if demand increases.
In fact, a global asset manager called VamEck predicts the price of ETH to potentially reach $11,800 by 2030 through a valuation model that contributes to the hard fork and its competition with the United States (US) treasury bill.
Valuation models mean estimating revenue, cash flow and multiples of ETH including recognizing the role of the digital asset as a store of value asset as well as a network of global solutions for smart contract platforms.
