Ethereum News: Nearly $12 million in ETH already burned through
Ethereum News: Nearly $12 million in ETH already burned throughEthereum News: Nearly $12 million in ETH already burned throughEthereum Update, Ethereum Hardfork, Ether

The London hardfork went live on Ethereum yesterday without any issues, as we reported in Ethereum News. However, in the real-time results, you can also see how the transaction fees are being burned. In the process, nearly $12 million in ETH has already been burned so far since launch.

10 million US dollars goes up in smoke

The upgrade was highly anticipated and this also contributed to ETH climbing upwards. Despite everything, the London hardfork was also controversial, especially among miners, as EIP 1559 was implemented here. The main issue was the fees, which were steadily rising. In addition, there were misunderstandings, as many assumed that the gas fees would be reduced with the upgrade. However, this is not the case, the upgrade burns the fees.

The mechanism behind EIP 1559 is that a portion of the gas or base charge burns. This is especially important for supply and issue economics, which is currently inflationary for Ethereum due to proof-of-work consensus. However, after the switch to Proof-to-Stake, these should be deflationary. Which is mainly because block rewards will reduce and transaction fees will go up in smoke.

Ethereum News – current burn rate of 3 ETH per minute.

You can almost imagine it, but millions have been burned since London went live. According to Etherchain, you can see that around 4,293 ETH went up in smoke so far. WatchTheBurn also shows similar numbers. That equates to around $12 million with a current ETH price of $2,770. It also shows a current burn rate of around 3 ETH per minute. Which means Ethereum is destroying around 4,000 tokens per day. However, if the load is heavy and gas prices rise, this could increase significantly.

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At first glance, this doesn’t sound like a lot. However, ETH supply is still inflationary, as ETH issuance was around 2.24 million, from January to the end of July. That equates to an annualized inflation in ETH supply of 3.8 million, or 3.3%, from 114.1 million to 117.9 million, according to Bankless. Subtracting daily burn rates, inflation could fall to around 1.25% to 2.66%. However, the Bankless report also notes the following. READ:

As we can see from the current supply and annualized burn numbers for 2021, there is a high probability that ETH will become deflationary after the transition to Proof-Of-Stake. Depending on the burn rate, Ether’s inflation rate can go as low as -1.05%.

Reason for high gas fees

Gas fees have risen sharply, especially in the last few days, as you can see from Ethereum News. In the process, they increased by 70% and ended up at $15 average transaction fee. Trent.eth, the Ethereum ecosystem researcher explained that there were several factors why the price of gas increased. First, it was due to the NFT collapses as well as the overall volatility of the ETH market. There was also a lot of network congestion and miners were setting lower and lower gas prices. There is a lot at play here and the London hardfork including EIP 1559 is intended to counteract this.

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