Several hours after releasing the much-awaited upgrade ‘London Hard fork,’ of the second-largest cryptocurrency, much of the Ethereum has already been burned due to the new EIP-1559.
What this means is that the cryptocurrency is sent into an address uncontrolled and inaccessible by anyone. The coins are destroyed by the protocol and removed from circulation on the network.
Explaining ETH burning, Luit Hollander, MyCrypto developer, said this happens by removing the ETH from those making the transaction. As against the initial way of paying the miner, the ETH removed is not paid to the miners.
While over 4000 ETH worth over $10 million had been burned so far according to The Etherchain burn tracker, it is reasonable to ask if it will continue. Experts say the higher burning is experienced when more transactions occur. Once the network goes quiet, the ETH burning slows down.
Anonymous security Hasu wrote that the processing of all transactions backlogs of Mempool is attributed to the current high burning rate seen in Ethereum. It is expected to slow down as soon as the transactions are completely processed.
He wrote, “don’t expect the current burn rate to cont forever,” before adding that “once the mempool has been cleared entirely (which should happen any moment now), blocks will become smaller, and the base fee will fall again.”
According to analysts, EIP-1559 is not designed to make Ethereum deflationary. However, EthHub co-founder Eric Conner, noted that Ethereum block 12,965,263, saw more ETH being burned than was issued. 25.9 ETH was burned in base fees in this case, while the amount of new ETH given to miners for mining blocks is only 2 ETH. Conner described this as “the first deflationary block in history.”