Since Ethereum’s London Hard Fork, more than 297,000 ETH has been burned, worth just over $1 billion
Ethereum Improvement Proposal (EIP) 1559 was an integral part of the hard fork in London on August 4, as AZCoin News reported. The EIP aims to stabilize the transaction fee market, reinforcing the economic value of ETH and against the inflation rate that comes from the miner’s reward. Since it was first deployed last month, approximately 297,000 ETH in base fees – worth over $1 billion at current exchange rates – has been burned and permanently removed from the circulating supply.
More than $1 billion in ETH has been burned since Ethereum’s London hard fork
Six weeks after the hard fork took place, the network is starting to reap the benefits of the upgrade. While transaction fees remain near all-time highs, gas price volatility has narrowed. Gas price is defined as the amount users are willing to pay for a unit of gas, measured in gwei.
Two types of fees combine to generate the ETH transaction fee amount: the base fee and the priority fee. The base fee is the mandatory price a user must pay for their transaction to be added in a block; the priority fee, or tip, is discretionary and can be included to incentivize miners to prioritize the transaction.
The fee market upgrade in EIP 1559 made the base fee increase or decreased by 12.5% per block, depending on the level of demand in the previous block. After the upgrade, miners still receive priority fees; however, all ether used for the base fee has now been “burned” or permanently removed from the network.
The fee market upgrade in EIP 1559 implemented a 12.5% base fee increase or decrease per block, depending on the level of demand in the previous block. Post-upgrade, the miners still receive the priority fee; however, all the ether used for the base fee is now “burned” or permanently removed from the network.
A few days ago, the asset was even net deflated because the base fee was higher than the block reward, and investors noted the newfound scarcity. The burning mechanism is on pace to eliminate 2.56 million ETH that would otherwise be inflating the supply over the course of a year. At current prices, this is $8.89 billion and nearly 2.2% of Ethereum’s total market capitalization.
ETH/USD 4-hour chart | Source: TradingView
At the time of writing, ETH is changing hands at $3,491, recorded a 4% increase in the last 24 hours.
Increased demand for “block space,” created by network usage, has been largely the result of the explosion in the NFT market. OpenSea has been responsible for the burn of 42,072 ETH to date, outpacing Uniswap, wallet-to-wallet transactions, and NFT trading game Axie Infinity.
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