2 million Ethereum burned since August 2021, i.e. $5.8 billion destroyed!
$5.4 billion. Or 2 Million ETH. This is the number of Ethereum that have been destroyed!
Ethereum, ETH , burn continues since last update. Indeed, more than 2 million Ethereum , the equivalent of 5.8 billion dollars have been burned and this, in a definitive way. It is thanks to the EIP-1559 that the burns occur. It was the “London Hard Fork ” that introduced this mechanism.
All this fits into the future Ethereum 2.0 , now called “Concensus Layer.” However, network users are almost over the moon. We will therefore ask ourselves the following questions: why such optimism, on the part of users, of this network so decried lately? What are the major changes brought about by the London Hard Fork ? How does this update affect the market?
- PMore than 2 million Ethereum burned
- EP-1559- its ins and outs
- The impact on the price of ETH
Burn ETH To Reduce Gas Fees
For some time, the Ethereum network has suffered from excessive gas fees. Indeed, we could see the community complaining and sometimes abandoned this network for other blockchains. Complicated to use a crypto on a daily basis when the gas fees sometimes exceed the amount of the transfer. To alleviate this congestion problem, the London Hard Fork was launched.
It is a saving, of at least 20%, per transaction that this change allows. The transaction cost, formerly paid to miners, is now reduced, and partly burned permanently. This system allows a deflationary dynamic, which is not to displease the community. As we said in the introduction, more than 2 million ETH have been burned in less than a year. This amount represents, all the same, more than 5.8 billion dollars.
To give another example, over the past month more than 134,000 ETH have been withdrawn, or more than $393 million. The impact of these burns is direct, on gas fees. In December 2021, fees almost reached 1000 Gwei against 29 at the time of writing this article. What a change, and what a return of confidence for investors!
EP-1559- Integrated Into The London Hard Fork
It is in August 2021 that the London Hard Fork is put into service. This update includes 5 changes to the blockchain. The most notable being EIP-1559, this is the name given to the burn system. The latter makes it possible to better estimate transaction costs and avoid other fees. This EIP project offers an integrated cost tracking interface that provides a set of process indicators and a reporting interface. The latter provides indicators and a cost monitoring module. This avoids, among other things, ending up with additional costs that we have experienced in the past. This advance in the blockchain has made it possible to restructure the gas fee system. The EIP has divided the taxes into “base fee” and “tips.” The bases fees are, they are burned, it is a way of saying that they are destroyed and withdrawn from circulation. As for tips, these are for minors. This whole process results in less, and less ETH in circulation.
The Impact On The Price Of Ethereum
With blockchain costs falling, the DEFI and NFT sectors are increasing demand. This increase should, very logically, be reflected in the price of Ethereum. Added to this is a scarcity of ETH, which tends to take the price up.
This is exactly what we observe, moreover, on the latter. ETH is currently at $2920. An increase of nearly 12.5% over the past week and nearly 60% since the famous update. Despite a mixed context and prices, since the madness of November 2021, ETH has remained on more than honest performance. It should still be remembered that it is the second most used blockchain. That many other cryptos and tokens rely on this network and the Concensus Layer is not entirely there.
Suffice to say that we are more than optimistic about the future of this network which, so far, has disappointed us very little.
What Will Be Next For Ethereum 2.0?
EIP-1559, brought by the London Hard Fork update , enables a deflationary ETH system and a lower cost per transaction. This dynamic has since enabled even greater public adoption of this blockchain. Confidence is now almost total for investors. Whether in DEFI or NFTs, this change has done the Ethereum ecosystem a lot of good. Additionally, Vitalik, on his Twitter, talks about the upcoming EIP-4844, which is a step closer to Ethereum 2.0.
The Consensus Layer, now highly anticipated by the community, will allow greater ambitions. Reduced transaction speed and lower costs. Reduced environmental impact and improved safety. But above all a change in the security of the blockchain with the transition to Proof-of-Stack.
So, are you ready for these bright days ahead?