Ethereum EIP-1559 went live on Aug. 4, 2021, as part of an improvement proposal to upgrade the transaction fee system. It has since burned over 1.8M Ether so far.
Introduced in August 2021, EIP-1559, as part of the London hard fork, was designed to improve Ethereum's fee market, helping to make transaction fees more predictable, reduce the impact of frequent first price auctions (a.k.a gas wars) and ensure more consistent rewards for miners.
As part of the update, EIP-1559 includes a burn system, which sees a fraction of each transaction fee (known as the base fee) burned thereby removing it from the ether supply. The rest of the transaction fee is shared among miners, as usual.
Given the huge sum of ETH spent on fees on the Ethereum blockchain, EIP-1559 has now resulted in a sizeable chunk of change being permanently burned.
In the last six months, a total of over 1.85 million ETH has been burned thanks to EIP-1559 — worth around $5.3 billion, at the time of writing. Much of this is owed to the extreme popularity of major Ethereum-based DeFi applications, including Uniswap, Curve, 1inch and OpenSea, which now account for a large proportion of on-chain transaction activity.
According to data from watchtheburn, ETH issuance has now reduced by 70.3% since the introduction of EIP-1559, helping to limit inflation in the ETH supply. This figure has exceeded 100% at times, meaning ETH was briefly deflationary.
Though $5.7 billion in burned coins may seem like a staggering sum, it should be noted that this represents just 1.6% of its market capitalization (~$345 billion as of writing). Nonetheless, given that the Ethereum 2.0 merge is inching closer, the impact of EIP-1559 may become more obvious in the future, since staking rewards are expected to be significantly lower than mining rewards, hence resulting in lower inflation.
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