The Ethereum chain is on fire – how long can it sustain the burn?
Hot, Hot ETH
Ethereum finally had its first deflationary day. A month following the implementation of upgrades from EIP-1559, Ethereum recorded a day of negative ETH issuance on September 6th.
The day passed by like any other but could well prove to be a watermark moment in the history of Ethereum: the first full deflationary day.
What this means is that more Ether was burned than mined over a day. Through a process of token burning, the chain burned over 13,485.5 ETH and a total net change of -352.8717 for the day. The amount burned is equivalent to nearly $54 million. The process is burning over 350ETH per hour, according to EthBurnedInfo.
“1559 is definitely the most important part of London,” said Ethereum’s founder Vitalik Buterin in an interview with finance reporter Matthew Leising of Bloomberg Singapore in August. “Now, it gets much easier to send a transaction that will get included in the next block and that’s very important to user experience.”
The EIP essentially changed the network forever by adjusting the algorithm tethered to the gas fees and also burns some transaction fees of every new block. These fees used to be rewarded to miners but instead, hopefully, go towards creating a more valuable Ethereum in the long run.
We’ve seen a total of 220,000 ETH burned in just over a month– nearly $750 Million. Approaching a billion burned, ETH is on fire.
Ultra-Sound Money?
Right now, gas fees are still very high, which results in more ETH burned. The event caused many to celebrate the arrival of ‘ultra-sound money. Ultra-sound money is whenever an asset has a decreasing supply, as we’ve seen with the recent deflation from Ethereum.
Unlike an asset like Bitcoin with a finite supply, Ethereum now has the potential to decrease its supply continually. The change has directly fueled a price increase for the currency. Ethereum has shot up from $2,516 on August 4 to over $3,900 today—a 56% rise, according to CoinMarketCap.
The boost has also been fueled by the insane popularity of NFTs this past month. The digital assets have truly exploded. Open Sea, the largest NFT platform on Ethereum, burned 15% of the gas transaction fees in August.
Some have doubted if Ethereum can be considered for several reasons. Regardless of these semantic games, which may be just price pumps, Ethereum has reached a deflationary point that is dangerous for other chains. The value of Ethereum could climb very high with demand.
However, Ethereum still has a long time before Ethereum 2.0 is completed, and much still needs to be done to lower gas prices. Questions remain about whether miners will ultimately get outrun by the burns as well.
Source : bsc.news
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