Ethereum sees its first week of deflationary problems in a row
The Ethereum network has seen its first week in a row with negative releases as an active market keeps transaction fees consistently high.
With the highly anticipated upgrade in London, which introduced the write mechanism for the Ethereum fee market in early August, a small amount of Ether has been destroyed with every transaction on the network since then.
With gas prices remaining high, Ethereum has seen the network deflate for seven consecutive days, meaning more ETH has been taken off the shelf than is being generated by mining. about 150 gwei.
EthHub co-founder Anthony Sassano commented that deflation of Ethereum is not to be expected until “consolidation” – if the Ethereum blockchain is to merge with Eth2’s beacon chain, which is now expected for the first half of 2022.
According to the charge burn tracker Ultrasound.Money, around 15,000 ETH (65 million US dollars at current prices) are burned every day. When calculating the percentage of ETH created, WatchtheBurn reports a net weekly release of minus 8,034 ETH (about $ 34 million) at press time.
Since the upgrade in London, more than 724,400 ETH worth $ 3.1 billion have been permanently destroyed.
The average cost of an ERC-20 token transfer is currently $ 46, according to Etherscan. Something more complex like providing liquidity for the DeFi protocol or performing a token swap on Uniswap can cost up to $ 140 right now.
Sassano emphasized that the upgrade does not increase gas prices, it also makes it more predictable. “Contrary to popular belief, EIP-1559 did not increase gas prices and actually helped significantly with an increase in demand (as in times of high NFT coinage),” he said. which resulted in smoother network operations.
According to the Bankless Ethereum Q3 network report, the value of transactions paid out between July and September of this year is a whopping $ 536.5 billion, an increase of nearly 400% over the same period last year.
Related: The Ethereum supply is quickly falling into deflation as gas charges rise
Despite Ethereum’s first week of deflation, many Ether proponents are looking for ways to get users to switch to trading with its burgeoning Layer 2 ecosystem.
According to L2beat, there is a total record $ 4.68 billion locked on various L2 networks. This TVL has grown nearly 500% in the past two months as Ethereum users increasingly look for ways to avoid these outrageous transaction fees.