2M ETH BURNED, TOTAL SUPPLY DECREASED
EIP-1559, launched in August 2021, is Ethereum’s popular fee burning proposal. Data from ultrasound.money has shown that at this point, it has burned 2 million ETH. EIP-1559’s mechanism to burn part of the gas fee with each ETH transaction was originally created to adjust the fee market of ETH, since the auction system that Ethereum gas fees adopted could make it very hard to predict the costs of transaction. The introduction of EIP-1559 allowed users to pay a minimum transaction fee, or base fee, then give a tip to miners at their discretion, so these miners will process their transaction faster during high congestion times. However, since August 2021 when Ethereum shipped its London hardfork, EIP-1559 has added deflationary pressure on ETH as well as reduced its total supply over time.
Ultrasound.money also reported that every minute, Ethereum will burn over 6 ETH. A large part of that is consumed on the biggest NFT marketplace – OpenSea. With the boom in the NFT market, OpenSea has taken Uniswap’s place as the biggest gas guzzler on the Ethereum blockchain, with ETH transfers coming ahead of Uniswap transactions.
The Long-Awaited Merge
After the London hardfork will be the long-awaited Ethereum’s protocol update, the Proof-of-Stake consensus mechanism. The update, dubbed “the merge,” will combine the blockchain’s consensus layer (Beacon Chain) with the existing Ethereum mainnet.
After successfully completing a simulation of the event on the Kiln testnet (Ethereum Foundation’s Tim Beiko noted that one client could not produce blocks during the runthrough though), anticipation is higher than ever. Even prior to the test launch, many fans of this top smart contract network had been eagerly waiting for the merge, as this shift from Proof-of-Work to Proof-of-Stake is believed to be one of the most pivotal events in the history of blockchain. In addition to implementing a key protocol change to compensate ETH stakers instead of miners, Ethereum is also predicted to become 99.95% more energy efficient. This change should be appreciated by both the crypto community and the public.
Once the merge happens, ETH emissions will be reduced significantly. The ETH supply is growing by approximately 4.5% each year to pay miners, but after the introduction of Proof-of-Stake, the emission is forecast to be closer to 1%. Since EIP-1559 burns 6 ETH every minute, there may not be enough ETH to reward validators.
The launch date hasn’t been officially confirmed at the moment, but it’s expected to take place in June 2022.
