Ethereum Burn Continues, as Negative Daily Issuance Recorded for First Time Since EIP-1559

by Eva Fox September 04, 2021

Ethereum Burn Continues, as Negative Daily Issuance Recorded for First Time Since EIP-1559

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The burning of Ethereum continues and for the first time since EIP-1559, a negative daily issuance is recorded. Ethereum's deflationary upgrade will undoubtedly have a huge impact on the development of the currency.

The hard fork London, which includes EIP-1559, has already been deployed and is proving to be effective. The daily issuance of the world's second-largest cryptocurrency by market capitalization turned negative for the first time since the Ethereum EIP-1559 network upgrade. The Block's Data Dashboard shows that the daily net emission of ETH was -333 on September 3, which turned negative about 30 days after the activation of the EIP-1559 upgrade on August 5, according to The Block.

The main problem of the Ethereum network from the user's point of view is high fees. Low scalability and high cost of financial transactions have been the "Achilles heel" of the Ethereum network, despite all its achievements. In the spring of 2021, the hectic demand for NFT, DeFi investments, and high buyer activity on some days made transactions quite unprofitable for the user, or take a long time. This problem was partially solved with the help of the hard fork London and its several codes.

Within the framework of one of them—EIP-1559–important changes took place for the Ethereum network and the price of transactions in it:

  • Greater predictability in calculating transaction fees on the network;
  • Reducing delays in confirming transactions;
  • Improving UX by automating the commission rate system;
  • Implementation of a mechanism for burning ETH when conducting transactions.

Thus, the update changed the monetary policy of Ethereum, burning part of the transaction fees in each new block, which previously belonged to Ethereum miners, to thereby reduce the fees for network users.

Since the activation of EIP-1559, about 193,000 ETH has been burned, which is more than $700 million at the current price. The number of ETH burned on September 3 was 13,840, surpassing the 13,507 ETH that were newly minted as block subsidies over the same period.

Since August 5, the daily emission of ETH has been in a deflationary trend. In fact, the transaction fees that Ethereum miners collected in August have dropped from over 90,000 ETH in July to just over 66,159 ETH, while over 170,000 ETH were burned last month.

© 2021, Eva Fox | Tesmanian. All rights reserved.


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Article edited by @SmokeyShorts, you can follow him on Twitter

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