Ethereum Improvement Proposal (EIP) 1559 has removed over 2 million ETH from circulation since it was implemented in August.
2 Million ETH Burned Since EIP-1559 Rollout
Ethereum’s burning mechanism is hotter than ever.
According to data from ultrasound.money, the crypto market’s second-largest network has officially destroyed a total of 2,004,379 ETH since its launch. In dollar terms, this is equivalent to $6.03 billion that has been permanently removed from circulation.
EIP-1559 is debatably Ethereum’s most significant update that was implemented with the London hard fork last August. The proposal overhauled Ethereum’s fee dynamics. With the EIP-1559, the base fee is set automatically by the Ethereum protocol and is then burned instead of being given to miners as rewards.
At the moment, the Ethereum network burns at least 6 ETH per minute. Industry pundits suggest that if more ETH is removed this way than is minted, it will make the ether cryptocurrency deflationary. Others say that while bitcoin’s fixed supply exemplifies sound money, this burning proposal makes ether ultra-sound money.
So What Comes Next?
After the London hard fork, Ethereum’s next step is to shift from the energy-intensive proof-of-work (PoW) network to the much-anticipated proof-of-stake mechanism which is considered environmentally friendly.
The so-called “Merge” will involve the deployment of Ethereum’s execution layer (Ethereum mainnet) to the upcoming ETH 2.0 proof-of-stake blockchain. The ropes of this transition prompted the Ethereum Foundation to rebrand Ethereum 2.0 to the “Consensus Layer”.
Ethereum fans were delighted last week to learn that developers had tested this Merge event on the Kiln testnet. The process was to a great extent a success, save for one client who failed to produce blocks consistently, core developer Tim Beiko revealed.
The Ethereum Foundation hopes Kiln will be the final merge testnet to be deployed before the present public test nets are updated. Once the merge is live on the public Ethereum network, the Consensus Layer will be in place. This major upgrade will not only lower energy usage and gas fees but will also improve the network’s overall transaction speed.
The merge is expected to take place in the second quarter of this year, though an exact date has not been provided. In the meantime, the bullishness around Ethereum’s move to a PoS design has led to the cryptocurrency entering rebound mode. For perspective, ETH has gained circa 18.4% in the past seven days to trade at just over $3K.