Why are ETHs burned?
Ethereum’s “London” update took place yesterday. It introduced a whole series of measures intended to improve the network, including the EIP-1559. The latter introduces base fees for transactions, which are automatically adjusted according to network congestion. This also automatically burns part of the fees generated for each transaction. In the medium term, this limits ETH inflation.
The higher the demand on the Ethereum network, the higher the fees. As a result, more and more ETH is burned. This model could help drive the price of ETH higher, thanks to a reduction in supply.
👉 To learn more, listen to our podcast – EIP-1559: how do you update a blockchain?
$ 475,000 in ETH burned every hour
How many ETH are then burned since the Ethereum update? According to Etherchain data, 2.86 ETH has been burned every minute over the past 24 hours, which is $ 7,928 at the current price. If you put that down to 60 minutes, that’s $ 475,000 worth of ETH going up in smoke every hour.
Unsurprisingly, it is the field of NFTs that represents the largest number of ETH burned. According to Ultrasound.money, COVIDPunks and the OpenSea marketplace are the biggest blazes, followed by DEX Uniswap:
👉 To read – The NFTs OpenSea marketplace closes a fundraising of 100 million dollars
A “burn” that will calm down
The last 24 hours have been special for Ethereum: the network had to process the backlog of transactions that were still in the mempool, that is to say their waiting area. This is why ETHs have been burnt at such a sustained rate. This morning, the network is already showing that this will not always be the case: 1.95 ETH was burned in the hour preceding the writing of these lines.
Base network charges should therefore decrease, and block size should also decrease. The change, however, was symbolic: in block 12,965,263, there was more ETH burned than ETH distributed to miners. It was the first time that a block of Ether could be considered “deflationary”.
The price of Ether (ETH) on the rise
The enthusiasm around updating Ethereum seems to have carried the price of ETH. This increased by + 16% over the week, against a Bitcoin (BTC) which only climbed by + 1.8% over the same period. ETH has thus experienced two successive breakthroughs over the past two days, reaching $ 2,851:
Source: TradingView, ETH / USDT
Currently, ETH is trading for $ 2,763, with a capitalization of $ 323 billion.
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About the author: Marine Debelloir
Associate Editor on Cryptoast, I fell into the pot of cryptocurrencies a few years ago. I am passionate about the innovative technologies that arise from the blockchain and I like to find the most delicious information to share with you.
All articles by Marine Debelloir.