The amount of Ethereum that has been burned since the London Hard Fork in early August is now more than $ 1 billion. Deflationary effects are likely to occur more frequently in the near future.
The amount of Ethereum that has been burned since the hard fork “London” in early August has just passed the $ 1 billion mark. At the time of this writing , the ultrasound.money platform , which is tracking the combustion process, reports a total consumption of 304,321 ETH. At the current exchange rates, that’s a little over a billion US dollars. Previously, Anthony Sassano, founder of EthHub and Daily Gwei, tweeted that the amount of ETH burned exceeded 300,000. (Also Read: Crypto market in Africa grows by 1,200 percent in one year)
The combustion process started on August 5th when the Ethereum upgrade called “London” and with it the long-awaited upgrade EIP-1559 was introduced. This upgrade changed the mechanism of transaction fees . The auctions where fast processing meant high fees no longer exist. Instead, the basic fee is now set algorithmically and adapts to the network load. In return, the upper limit of the block size of 25 million gas units is now twice as high as before. If the demand exceeds this rate by half, the basic fee goes up. Otherwise it will drop again.
Transaction costs with Ethereum are significantly lower
By and large, the Ethereum community should welcome the hard fork. After all, according to an estimate by the Gemini crypto exchange, it is accompanied by a reduction in transaction costs of around 90 percent. Since with the innovation the fees are not transferred to miners as before, but are simply burned, the flow of ether slows down significantly . Deflationary phases, which burn more ether than gain new, could therefore occur more frequently in the near future.
This applies all the more from the point in time at which the ETH 1.0 chain is merged or “docked” with the ETH 2.0 Beacon Chain, which means the end of proof-of-work and the transition to proof-of-stake. According to the official documentation, this should happen sometime in the first or second quarter of 2022. It is obvious that the miners will no longer play a role in the network.
Currently, the largest consumer of gas fees is the NFT marketplace OpenSea , which generated around 850 ETH or almost three million US dollars in fees within one day. In any case, the hype about DeFi and especially NFT has ensured that the old fee structure of Ethereum could no longer keep pace and therefore made the hard fork “London” necessary.