Over 4,000 ETH burned hours after EIP-1559 upgrade
The Ethereum network underwent one of its most crucial upgrades last night. And things are going as planned so far.
Over 4000 ETH have been ‘burned’ just hours after the ambitious EIP-1559 upgrade was rolled out on the Ethereum network, data from multiple sources shows.
The burned stash is worth over $11 million at press time, representing a tiny portion of the asset’s $325 billion market cap. Still, the burns mean everything is working as intended, ahead of Ethereum’s move to a proof-of-stake upgrade in the coming months.
Major milestone for Ethereum today with EIP-1559 going live and the first 100 $ETH burned.
Regardless of your view on eth vs btc's monetary policy it is incredibly cool to see a network implement improvements on-the-fly.
— Luke Martin (@VentureCoinist) August 5, 2021
As on-chain tracker EtherChain shows, 4,067 ETH have been burned as of 0800 GMT at an average ‘basefee’ of 30 gwei. This means 2 ETH are burned every minute—and 120 ETH each hour—at the current rate (this, however, is subject to change as network demand fluctuates).
A fair amount of ETH is burned per block as well. As the below image shows, block 12970044 saw over 0.8 ETH getting burned in total, while 12970045 saw a smaller 0.68 ETH burned. Zero ETH burned in both blocks 12970051 and 12970050, data further shows.
How EIP-1559 helps
The EIP-1559 makes fees more predictable for users. After the upgrade yesterday, a ‘base transaction fee’ is now charged to users, and it is algorithmically determined by how busy the network is. Users, on their end, ‘tip’ miners to have their own transactions processed quicker.
The miners themselves will only receive the tips, and the ‘base fee’ amount will be ‘burned’ out of supply forever. In terms of the market effect, this means there’s now fewer and fewer ETH supply available on the market daily, making the asset even more valuable to holders and investors, at least in theory
Meanwhile, not everyone says prices are bound to go up only after the EIP-1559 upgrade. “I think people are still drastically overestimating what EIP-1559 will do in the short term, while also drastically underestimating what it will do in the long term,” said Cinneamhain Ventures partner Adam Cochran in a tweet yesterday.
I think people are still drastically overestimating what EIP-1559 will do in the short term, while also drastically underestimating what it will do in the long term.
— Adam Cochran (@adamscochran) August 4, 2021
And recent price action (Ethereum has budged just +2% since yesterday) might just prove that sentiment correct.