More than 1.2 million ethers have been burned since the Ethereum “London” hard fork. Equivalent to: $ 5 billion.
On August 5 the time had come: Ethereum received the EIP-1559 update implemented with the “London” hard fork. In addition to expanding the block size and introducing a uniform base fee, Ethereum’s upgrade proposal also contained a combustion function: transaction fees have since been burned and thus removed from the amount in circulation. . The balance after less than five months: more than 1.2 million ETH has been burned since “London”, according to data from Dune Analytics Show. Equivalent to: $ 5 billion.
Ethereum Fire Accelerator
The constant hype about NFT, DeFi and blockchain games, which are essentially based on the Ethereum blockchain, is responsible for the internal combustion engine overheating. With over 135,000 ethers burned ($ 500 million), the NFT Opensea market is the largest instantaneous water heater. Decentralized exchange (DEX) Uniswap V2 ranks third with 112,000 ETH ($ 458 million). The play-to-win game Axie Infinity is ranked eighth with over 16,000 ETH (US $ 59 million).
Deflation in moderation
In terms of price developments, the combustion mechanism is not insignificant. Supply and demand determine the price, also with Ethereum. The throttling of the quantity in circulation can cause excess demand in the bull market phases and thus boost the price.
Another side effect: deflation. If more ether is extracted from the circulating quantity than the miners add new ones, the inflation rate gradually stabilizes. In the case of high commercial activity, the mechanism eventually leads to a shortage of ether stocks. This happened on a few trading days in September, October and November in which up to 16,800 ethers were burned per day. In contrast, the supply of ether is currently growing by an average of 13,000 to 14,000 ethers per day.
A tired topic
One really intended side effect is yet to come: lower transaction fees. EIP-1559 has doubled the size of the block to 25 million gas units. The bottom line: at the same transaction level, the upgrade ensures 50 percent utilization. This is supposed to bring the basic rate down to an affordable level.
Solo: the rush for Ethereum hasn’t abated. On the contrary, at the beginning of the year it was decentralized finance and NFTs that bogged down transaction channels, metaverse worlds and blockchain games like Axie Infinity, Decentraland or The Sandbox joined them in the middle of the year. According to Bitinfocharts Average transaction fees (gas fees) are currently 0.0099 ETH, around 37 USD.