Since the deployment of Ethereum Improvement Proposal (EIP) 1559 via the London hard fork on August 5, about $6.3 billion worth of the second-largest cryptocurrency by market capitalization, Ethereum ($ETH), has been burned.
Since August, a total of 2.274 million ether worth $6.27 billion has been burned, according to data from tracking website Watch the Burn, with an average of 355 ETH worth over $1 million lost per hour and 4,900 ETH burned per day.
Ethereum’s net issuance has plummeted to about 8,300 ETH each day, representing a net reduction of 37.15 percent. If burns outstrip net issuance, as they did on a few blocks, some observers believe ETH will become a deflationary currency.
The Ethereum Improvement Proposal (EIP) 1559, which modified the way transaction fees function on the network, was implemented as part of the London hard fork. Instead of using an auction system, users now pay a flat cost to have their transactions processed by miners, and they can tip miners to have their transactions processed faster.
Miners aren’t paid the base price since it might encourage them to purposely congest the network in order to earn more. The base fee is instead burned, essentially removing ether from circulation for good. It rises when demand is high and falls when demand is low.
Analysts anticipated that $5 billion worth of ETH may be burned in a year at the time of the update. The latest figure indicates that far over $5 billion has been spent.
Following the London hard fork, some investors were positive on ETH. Raoul Pal, a former Goldman Sachs executive, has stated that Ethereum is the “best trade” setup he has ever seen, as the cryptocurrency’s fundamentals indicate that it has a significant upside ahead of it.
After the network merges with the Proof-of-Stake (PoS) Beacon Chain, which is presently running alongside Ethereum’s mainnet, ETH staking payouts might double.
After the Ethereum mainnet merges with the Beacon Chain, which Coinbase predicts will happen “around June of this year,” ETH staking yields may rise because “rewards will comprise net transaction (ex-base) fees currently paid to miners.”
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