The Ethereum network set a new milestone with 3 million ETH burned after 1.5 years of implementing the EIP-1559 coin burning mechanism.
According to data from Ultrasound.moneythe Ethereum network in the early morning of March 15 has reached 3 million ETH burned from EIP-1559.
Calculated at the current market price of ETH of $1,710, the amount of Ether is worth more than $9.1 billion in total.
3M ETH burned since EIP-1559
— ultra sound money (@ultrasoundmoney) March 14, 2023
As explained by Kyptos, EIP-1559 is a special mechanism implemented by Ethereum in August 2021. This mechanism will set a common fee called base fee that applies to all transactions on Ethereum, instead of leaving users free to set fees – something that in the past caused ETH gas fees to always “build up”. during peak periods. As a result, EIP-1559 helps to stabilize fees and makes it easier for users to predict the fluctuation of gas fees, as well as having the option to pay a priority fee for transaction validators to help transactions. performed faster.
However, the most notable change of EIP-1559 is that it will burn the entire base fee to create deflationary pressure for Ethereum.
Ethereum has reached 1 million ETH burned since EIP-1559 on November 24, 2021, 2 million ETH on March 21, 2022 and the latest 3 million ETH on March 15, 2023. It can be seen that the gap between the burns of 1 million ETH is gradually increasing, which corresponds to a decline in activity on the Ethereum network as the crypto market plunges in 2022.
Thanks to EIP-1559, the circulating supply of ETH on Ethereum is currently 64,300 coins lower than when The Merge upgrade was implemented in September 2022. Ether’s annual deflation when combined with the decline in Proof-of-Stake and EIP-1559 transaction verification rewards is 0.108 percent/year.
If still using Proof-of-Work, Ethereum will still record an annual coin inflation rate of up to 3,423%, with approximately 2 million ETH newly released to the market.
The activities that consume the most fees since the launch of EIP-1559 to date include transfers of ETH, stablecoin USDT and USDC; trading on DEX Uniswap and MetaMask wallet; and NFT transactions through OpenSea.
Seeing the success and impact of EIP-1559 on Ethereum, other blockchain projects also launched similar initiatives like EIP-1559 on Polygon and BEP-95 on BNB Chain.