Recently, a striking phenomenon has emerged in the crypto world: a large amount of Ethereum (ETH) has been permanently locked, which has sparked widespread discussion in the industry. According to statistics, approximately 913,111 ETH have been rendered non-circulating due to operational errors, with a value of up to $3.43 billion. This figure does not include ETH that cannot be used due to lost Private Keys or forgotten Wallets.

What is more noteworthy is that if we also take into account the over 5.3 million ETH (worth about $20 billion) that were destroyed after the implementation of the EIP-1559 proposal, then 5% of the total supply of Ethereum has permanently left the market circulation. This phenomenon undoubtedly has a significant impact on the supply and demand relationship of ETH.

The reasons for such a large-scale locking of ETH are varied. Among the most well-known are:
1. The Parity multi-signature Wallet vulnerability caused the Web3 Foundation to lose 306,000 ETH.
2. The Quadriga exchange locked 60,000 ETH due to issues with smart contracts, and its CEO mysteriously disappeared.
3. The Akutars NFT project locked 11,500 ETH during the minting process due to a code error.
4. Some unknown groups transferred 25,000 ETH to the burn address (0x0000...).

What does this large-scale ETH locking phenomenon mean for the market? From an investment perspective, it could be a double-edged sword. On one hand, it reduces the supply of ETH in the market, which may drive up the price of ETH. Especially after Ethereum shifted to a Proof of Stake (PoS) mechanism, each on-chain transaction destroys a portion of ETH, further exacerbating the deflationary trend.

On the other hand, this also exposes the technical and operational risks present in the crypto assets ecosystem. Investors and developers need to be more cautious to avoid similar mistakes from happening again.

Overall, this phenomenon highlights that Ethereum is gradually transforming into a deflationary asset. Over time, if the demand for ETH remains stable or grows, while the supply continues to contract, we may see a long-term increase in the value of ETH. However, investors should still be cautious of the high volatility and potential risks in the crypto assets market.