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Saturday, May 20, 2023

Ethereum Is Burning Through $395K ETH Every Hour

It has been estimated that close to 2.3 Ethereum tokens are being burnt every single minute through the new mechanism of transaction fees. This was introduced to the London upgrade of the cryptocurrency on Thursday. The London hard fork did go live on Thursday which ushered the new upgrade- EIP-1559 that would carefully adjust gas fees. A major part of that adjustment was the introduction of the mechanism which exploits some of the collected base fees.

Ethereum’s New Upgrade Is Running Through The Tokens

The amount of Ethereum that has burnt since the upgrade went online was around 3,395 ETH- as stated by quite a few reports. According to Etherchain, the burn rate of the upgrade is 2.36 ETH per minute. This does equate to a sum of $6,596 every minute, or a sum of $395,000 of ETH which ends up as smoke every hour.

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The main alternative to this is Ultrasound.money which went on to report a total burn of around 3,390 ETH for a whopping sum of $9.5 million at the current price of Ether. The tracker has since then reported that the NFT marketplace OpenSea has been on the top of the burner with around 374 ETH, which is a sum of $1 million. 

Uniswap’s v.2 took second place as it went through around 263 Ethereum tokens- a total worth of $740,000. The founder of the crypto asset, Hayden Adams, went on to comment that the current burn rate settings- if things were to continue at this rate- would definitely burn around 350,000 ETH or around a billion dollars per year. A DeFi newsletter went around through certain figures in their attempt to predict the impact of this measure on future supply. 

Since the Ethereum base fee can be anywhere between 25% and 75% of the transaction fee available, it does make prediction and manual calculations pretty difficult. Also, when it would be combined with the current reduction in block reward issuance, it could lead to the cryptocurrency having a deflationary supply.

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