A deflationary event on Ethereum
The implementation of the eagerly awaited EIP-1559 made it possible to start the “burn” mechanism, which aims to better manage transaction costs on the network. The “London” update introduced “base charges” for transactions, which are automatically adjusted based on network congestion. This also automatically burns part of the fees generated for each transaction. In the medium term, this limits ETH inflation.
In the last 24 hours, more Ethers (ETH) have been burned on the network than new units created, meaning there is less ETH available than the day before.
Over the period covering Thursday to Friday, the growth in ETH supply turned negative. More ETH was burned than the 13,200 ETH issued by miners. This can happen when base charges adjust upward during times of high demand.
DeFi Pulse co-founder Scott Lewis and Week in Ethereum News founder Evan Van Ness believe this is the first case of Ethereum network deflation.
Already $ 637 million worth of ETH burned
Since the network update, 192,654 ETH has been burned, or around $ 637 million. During the 30 days, approximately 4.47 ETH went up in smoke every minute.
Unsurprisingly, it is the area of non-fungible tokens (NFTs) that represents the largest number of ETH burned. According to the site Ultrasound.money, the OpenSea marketplace represents the biggest infernos, followed by network transactions.
Since the implementation of EIP-1559, Ether has gone from $ 2,516 on August 4 to $ 3,926 today, an increase of 56% in one month.
👉 To read on the same subject: Vitalik Buterin admits the mistakes made when creating Ethereum (ETH)
About the author: Florent David
Engaged in the crypto ecosystem since 2017. I am particularly interested in decentralized finance (DeFi), Ethereum 2.0 and non-fungible tokens (NFT).
All articles by Florent David.