Since the adoption of the EIP-1559 proposal, the quantity of currencies burned on the Ethereum network has hit 100,000 ETH. It took only 21 days for the second-largest blockchain, which destroys thousands of dollars per minute, to reach the aforementioned milestone. The Ether price, on the other hand, remained sluggish in the run-up to the event that the market appears to have chosen to overlook.
The most prominent upgrade suggestion that came with the much-anticipated London hark fork, which was activated on Aug. 5, was EIP-1559.
The significant monetary policy shift is thought to be one of the fundamental catalysts for the Ether price, which experienced a significant surge in May. The fee-burning process has effectively transformed the Bitcoin into a deflationary asset, implying that its supply will continue to fall over time. Proponents of Ethereum often make light of the fact that they hold “ultra-sound” money.
According to analyst estimates, two million coins will be permanently removed from circulation throughout the coming year.
However, some critics contend that Ether’s monetary policy is excessively volatile. Previously, the Ethereum community was in a bind after failing to ascertain the exact total quantity of the second-largest cryptocurrency.
In comparison, Bitcoin is deflationary, with a maximum supply hard-capped at 21 million coins. Dogecoin is an inflationary currency, which implies it has an endless supply, similar to the US dollar and other government-backed currencies. While many members of the cryptocurrency community despise such monetary policy, supporters such as Elon Musk and Mark Cuban regard it as the meme’s main characteristic that allows it to become a viable mode of payment.
We’re getting closer to proof of stake (PoS)
The implementation of EIP-1559, on the other hand, was not without dispute. The key improvement was fiercely opposed by miners for obvious reasons: a big portion of their money is being lost. Since the “London” hard fork, they can only accept voluntary tips from users rather than recurring fees. The rest is being consumed by fire.
Currently, the biggest fee burner on the network is non-fungible token marketplace OpenSea, followed by automated market maker Uniswap. Prior to EIP-1559, miners received a percentage of every transaction, such as NFT purchases, which caused their revenues to skyrocket in early 2021.
Throwing miners under the bus makes sense given that Ethereum is migrating from the energy-guzzling proof of work (PoW) consensus mechanism to the more environmentally friendly proof of stake algorithm (PoS). When Ethereum 2.0 is released, stakers will be in charge of confirming transactions rather than miners.
According to ULTCOIN365, Ethereum co-founder Vitalik Buterin recently stated that he is more optimistic in the upcoming merger of Ethereum 1.0 with Ethereum 2.0, which is slated to take place next year following a series of delays.