At the beginning of last month, the big and long-awaited Ethereum (ETH) London update live on the main net. Part of this hard fork was EIP-1559. As a result of this update, among other things, transaction costs became more predictable and even some of the transaction costs were destroyed.
This provided a positive boost to the price of ether, but it also resulted in us September 4 saw for the first time that Ethereum was deflationary. More ether tokens were destroyed that day than new ones were added. This is a very good development for the course of ether in the future.
Ether ‘burning’
The Ethereum network has two types of transaction fees. First of all, you have the ‘base fee‘. This is an amount that users must pay at all times for processing transactions. In addition, there is also thepriority fee‘. This is an amount that is paid out as a reward to the miners on the Ethereum network.
The new update primarily increased the base fee by 12.5%. At the same time, however, it was also ensured that this amount is completely destroyed. The miners still receive their reward through the ‘priority fee’ to keep mining attractive.
Since the launch of the update, there has already been such a 297,000 ether destroyed. These ether tokens have a market value of more than $1 billion. These ether tokens have been permanently removed from circulation.
Only a few weeks after the update went live, the benefits are already noticeable. Although the gas parties, or the transaction costs, at the moment almost new all time highs the volatility of these transaction costs is much lower. This is also positive.
Ultimately, the level of transaction costs will also be reduced. This is also part of the ongoing big Ethereum 2.0 project. The first steps have already been taken with EIP-1559 and until then we can at least enjoy the ‘ether burning’ process.