Ethereum Burns $150,000 in One Block

Apparently this wasn’t the only one. A suspected NFT minting spike led to some 1,410 eth burned within one hour, worth $4.5 million taken out of circulation.

By comparison, about 2 eth is rewarded for every block, making this spike period very deflationary for eth as it was burning more than giving in rewards.

That’s due to the new EIP1559 algo which to make fees predictable sets a base network fee targeting 50% of capacity with that base fee burned.

This has also led to a 9% increase in ethereum’s capacity due to how the new algo is calculated which is partially why fees are generally low at about $2 on average earlier today and now at $4.

But during some periods of high demand as on this Sunday fees reached as much as an average of $50.

Here as in many other fields the measure of average is not too useful because it bundles together low fees for transactions that take minimal gas, like simple transfers between one address to another, with complex transactions that require a lot of calculations such as minting NFTs which need far more gas units.

Some say as much as 2 eth was paid in fees for minting an NFT. That’s currently worth as much as $6,000, a fairly huge sum for a jpeg on the blockchain.

Yet they’re booming. The latest one being CyberKongz which has burned 1,434 eth in the past 24 hours, worth some $5 million.

They look like CryptoPunks, but with monkeys. Clearly a great invention worth some frenzy as the top ones are apparently worth some 100 eth, making it a game of flip baby flip.

Which means there’s speculative elements here that don’t care much about $50 average fees as long as potential gains are far more, hence we get 50 eth burner blocks.

This jpeg burning has given eth holders nearly 5,000 eth out of circulation in one week and by just one NFT platform, OpenSea, worth $15 million.

Exchanging non-jpeg tokens on the other hand has given just 3000 eth in the same period on Uniswap.

In total some $165 million of 52,000 eth has been burned so far since August 5th. So if these NFTs make any sense is probably of little care to holders as long as they keep burning.

Not least because one can easily joke that eth is a token without a jpeg, albeit a token in which all these jpegs pay their fees with the ethereum network now pretty directly benefiting from all blockchain frenzies, whether in monkey or human form.