Week after London. Ethereum network has already burned more than $100 million in transaction fees
Week after London. Ethereum network has already burned more than $100 million in transaction fees Week after London. Ethereum network has already burned more than $100 million in transaction fees

The recent Ethereum hard fork, a long-awaited network upgrade that introduced mechanisms to reduce the growth of ETH supply, was successfully reprocessed last Thursday. As it turns out, a week makes quite a difference.

Since the hard fork, more than $100 million in ETH has been burned (taken out of circulation), contributing to a price increase from $2725 to $3230.

The London update included five code changes, though EIP-1559 was the most discussed. “The Ethereum Improvement Proposal” changed the transaction fee structure for the network. Instead of fees going directly to the miners who process and verify transactions, the base fee went to the network and is immediately destroyed.

While EIP-1559 was also a way to improve the user experience by automating transaction prices and taking the hassle out of the opaque auction process, it mostly had the effect of stoking demand by reducing supply.

While Bitcoin was created with a supply limit of 21 million digital coins, Ethereum has no such limit. EIP-1559 therefore introduces deflationary pressures. With each new block of transactions added to the chain, more ETH is mined and goes to the miner as a reward, but some of it is removed through fee burning.

According to ultrasoundi.money, more than 31,000 ETH have already been burned. At the current exchange rate, that’s just over $100 million – though of course it’s unclear how much ETH would be worth if those assets hadn’t been burned.

Over 10% of the fees burned came from transactions on the NFT OpenSea marketplace, where users can sell or bid on digital collectibles and artwork. Second and third place in terms of burn rate were decentralized exchange Uniswap and blockchain-based game Axie Infinity.

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Many users of the network’s largest altcoin are looking forward to Ethereum’s transition from the consensus algorithm <a href=”https://bithub.pl/kryptowaluty/mining/proof-of-work-wszystko-co-powinienes-wiedziec-o-modelu-konsensusu-bitcoina/” target=“_blank” rel=”noopener”>proof of work to a network based on proof of stake.

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