Over $1 Billion in ETH Has Been Burned so Far Thanks to EIP-1559
- Since EIP-1559 was introduced in early August, more than $1 billion worth of ETH has been burned
- EIP-1559 introduces deflationary pressure to ETH by burning every transaction's base fee
- So far, the biggest ETH burner has been NFT marketplace OpenSea
More than 1 billion worth of ETH has been burned so far
More than $1 billion worth ETH has been burned since Ethereum’s hard fork was activated in August and introduced EIP-1559. Per ETH burn tracker Watch the Burn, a total of 304,172 have been permanently removed from circulation since EIP-1559 was launched. In the last 24 hours alone, 6,793 ETH (about $24.7 million) have been burned.
EIP-1559 is an Ethereum Improvement Proposal that made fundamental changes to how Ethereum’s fee marketplace operates. With the activation of the EIP-1559, each Ethereum block has an associated base fee that users have to pay per transaction.
This fee is paid in ETH, and the coins are burned. Usually, burning cryptocurrency is achieved by sending it to an address that noone has the private key for, making it permanently inaccessible. In the case of Ethereum’s EIP-1559 burns, the burned ETH is destroyed by the protocol and no longer exists.
Before EIP-1559, miners were rewarded with both the block reward and the transaction fees paid by users. Post EIP-1559, miners still receive a block reward, but the fee income has been replaced with optional “tips” that users can include in their transactions in order to have them prioritized.
EIP-1559 has received a warm welcome from the Ethereum community, as it introduces deflationary pressure to the ETH supply. With enough time, this could be a direct contributor to rising ETH prices. EIP also has other benefits, such as allowing wallets to provide users with better transaction fee estimates, and removes incentives that miners might have to drive transaction fees higher.
As shown by ultrasound.money, NFT marketplace OpenSea has so far been the biggest ETH burning “culprit”, as usage of their platform has resulted in 43,043 ETH being burned so far. ETH transactions have been the second biggest ETH burner so far (26,722 ETH). The platform also shows that at current rates, the projected ETH burn on a yearly basis is 2.6 million ETH.
ETH is up around 400% since January 1, and has recorded a 15% gain in the last month. As the ETH burning continues chugging along, the cryptocurrency’s long-term prospects are arguably looking better than ever.
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