$10M ETH Got Destroyed Since Latest EIP-1559 Upgrade: Report

$10M ETH got destroyed right after the latest London hard fork and the EIP-1559 upgrade that was highly anticipated as the results can be seen of transaction fee burning as we are reading more in our latest Ethereum news today.

The London upgrade was passionately awaited not because of the fee reduction but because of the burning process. EIP-1559 introduced a  mechanism that burns some of the gas or base fee which is important for supply and issuance economics that are currently inflationary for ETH under the proof of work consensus. After the merge to ETH 2.0 and the switch to proof of stake, the economics are likely to become deflationary because of the block reward issuance and reduction with a portion of the transaction fees that still gets burnt. In less than 24 hours since London went life, about 3777 ETH were burnt according to Etherchain and similar figures of 3744 were being reported on the real-time tracker WatchTheburn at the time of press. This equates to around $10.4 million to a current price of ETH at $2770.

Using the current burn rate of 2.5 ETH per minute, the network will destroy 3600 tokens each day and this will increase when it is under heavy load and the gas prices increase. This does sound like a lot, but the ETH supply is inflationary. Around 2.24 million ETH were issued over the first few months of this year and on an annualized basis, the would equate to the ETH supply inflating by 3.8 million or 3.3% over the course of the year as it increased from 114.1 million to 117.9 million.

$10M ETH got destroyed sine the latest London hard fork, deducting daily burn rates will mean that inflation will decrease to between around 1.25% and 2.66% with the report adding:

“As we can see, based on the current supply and annualized 2021 burn figures, there is a strong likelihood that ETH becomes deflationary after the transition to Proof-Of-Stake. Depending on the burn rate, the inflation rate of Ether may fall as low as -1.05%.”

1/ You know it's serious when we move to a screenshot!! You may see people asking, in relation to London / 1559:

"Why are gas prices (baseFee) high? Why are priorityFees ("tips") higher than 2 nanoEth (gwei)?"

RT to spread info! pic.twitter.com/LyUgR7VFNT

— trent.eth (@trent_vanepps) August 5, 2021

One side effect of the London upgrade which saw a surge in gas prices. As per BitInfocharts, average transaction fees on ETH increased by 70% over the past day to $15. Ethereum researcher “trent.eth” explained that there was a lot of network congestion because of the NFT drops, exchanges disabling the transactions during upgrades, miners setting low gas limits, and the general ETH market volatility.