EIP-1559 Has Burned 2 Million Ethereum

Ethereum has burnt 2 million ETH. The next protocol change for the blockchain is “the merge” from Proof-of-Work to Proof-of-Stake. With the consequences of EIP-1559 and lower emissions from transitioning to Proof-of-Stake, ETH might become a deflationary asset very soon.

The number one smart contract network, according to statistics from ultrasound.money, burnt 2 million ETH today. Since Ethereum’s London hardfork in August 2021, the total ETH supply has been under deflationary pressure as a result of a fee burning proposal known as EIP-1559. EIP-1559, perhaps Ethereum’s most popular upgrade to date, included a system that burns a portion of the gas fee with each Ethereum transaction.

EIP-1559 was created to improve Ethereum’s fee market because Ethereum gas fees previously used an auction method, which made transaction prices unpredictable. EIP-1559 requires Ethereum users to pay a minimum cost for transactions known as the “base fee,” as well as an optional tip to miners in order for their transaction to be processed quickly during periods of heavy congestion.

EIP-1559 also applies deflationary pressure on ETH, reducing supply over time.

According to ultrasound.money, Ethereum is now burning slightly more over 6 ETH every minute. A significant portion of it is consumed on OpenSea, the world’s largest NFT marketplace. While Uniswap was formerly the network’s greatest gas guzzler, a surge in the NFT market has resulted in OpenSea taking the top rank, with ETH transfers coming in second ahead of Uniswap transactions.

Following the London hardfork, Ethereum’s next major protocol change will be the long-awaited transition from Proof-of-Work to Proof-of-Stake consensus. The update, dubbed “the merge,” will see the blockchain’s consensus layer (also known as the Beacon Chain) join with the execution layer (Ethereum mainnet).

This week, Ethereum successfully completed a simulation of the event on the Kiln testnet (however the Ethereum Foundation’s Tim Beiko noted that one client did not create blocks during the runthrough). Fans of the top smart contract network, on the other hand, have been counting down to the merge prior to this week; the transition to Proof-of-Stake is believed to be one of the most significant events in blockchain history.

Aside from implementing a crucial protocol change to compensate ETH stakers rather than miners, Ethereum is predicted to become 99.95% more energy efficient, which should be appreciated by both the crypto community and the public.

Importantly, after the merge occurs, ETH emissions will be dramatically reduced. The ETH supply now grows by roughly 4.5% each year to compensate miners, but with Proof-of-Stake, the yearly emission is predicted to be closer to 1%. Because EIP-1559 frequently burns 6 ETH per minute, the rate of ETH burned may exceed the amount granted in block rewards to validators. ETH would then become a deflationary asset.

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