Ethereum (ETH) Hodlers Beware: Already +$1.7 Billion of Ether Tokens Destroyed and ETH 2.0 Merge Approaching

At the beginning of August, the Ethereum (ETH) network through the long-awaited EIP-1559 update. This so-called ‘London’ hard fork overhauled the system regarding transaction costs on the blockchain network.

In addition, this update helps enormously with the scalability of the network. The update allowed for more transactions to be processed in a single block. In this way, the congestion on the network was somewhat reduced.

Also part of the EIP-1559 update was the fact that some of the miners’ revenues no longer go to this miner would go, but instead it would be destroyed. The so-called burning process.

Ethereum has no limit on the maximum amount of coins that can be in circulation. This while major cryptocurrencies such as bitcoin (BTC) have this. An unlimited maximum turnover can have negative consequences for the price. That is why it was decided to do something about it.

500,000 Ether Tokens Destroyed

Since the launch of EIP-1559 already destroyed more than 500,000 ether tokens with a market value of about $1.7 billion! That means the Ethereum network is on track to destroy around 3 million ether tokens annually.

This, in turn, helps keep ethereum inflation somewhat under control. Current forecasts assume a maximum annual inflation rate of around 2.2%. That’s a lot better than it was in the past.

Of course this is good for the price of the second largest cryptocurrency. Because there is no limit on the maximum amount of ether tokens in circulation, this could in theory put the scarcity of ether tokens into problems.

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ETH 2.0

Sometime in the second quarter of next year, the EIP-1559 update will be added to the list. Then the long-awaited merger of the Ethereum mainnet and the Ethereum 2.0 ‘beacon chain’ take place.

At that point, the consensus model of the Ethereum network will switch to a proof of stake consensus model. As a result, the inflation of ethereum tokens will be finally killed.

Forecasts currently assume an annual inflation rate of -2%. That means the Ethereum network is deflationary from then on. A hugely attractive prospect for Ethereum investors.

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