Barely six weeks after Ethereum’s London hard fork upgrade went live, the network has burned over $1 billion worth of ETH. According to data collected from Ultrasound Money, over 310,000 ETH worth over $1 billion had been burned since the London upgrade.
A hard fork occurs when there is a major alteration to the protocol of a blockchain network that results in a divergent split between the old protocol and the newer version. In a hard fork, miners must choose whether to continue validating the old blockchain or the new one.
The London hard fork was the latest upgrade and it incorporates five new Ethereum Improvement Proposals (EIPs), which are all temporary until the permanent Ethereum 2.0 update. One of the improvements is the EIP-1559 which is a proposal for the introduction of a ‘base fee’ that tracks gas fee prices across the entire Ethereum network in order to ensure accurate gas fee predictions for network users. It also gives the Ethereum network deflationary functionalities which gives the network the ability to burn gas fees and miners receive a part of the burned fee as a tip.
Overall, the update has been effective as a deflationary tool so far, lowering the network’s inflation rate. It has been able to reduce the amount of ETH produced daily and increase the amount of burned ETH. The amount of ETH burned has surpassed the amount produced daily which means one could say the ETH token is now a deflationary token.
One of the main reasons for the spike in burned ETH is Ethereum’s high transaction fees (gas fee). Ethereum handles not less than 1.2 million transactions on the network daily, and according to BitInfos, the average transaction fee as of yesterday was $27.
According to Ultrasound Money, and Ethereum network tracker, OpenSea, the popular Ethereum network NFT marketplace accounts for the most burns on the network which represents approximately 14.11% or 43,840 ETH which is equivalent to approximately $155.6 million.
Asides from OpenSea, ETH transfers account for 27,225 ETH or approximately $96.7 million and Uniswap V2 accounts for 17,075 ETH or approximately $60.6 million come in at second and third respectively. The popular play-to-earn platform, Axie Infinity, take the 5th spot, accounting for 9,553 ETH burned or approximately $33.9 million.
London hard fork is a vital step for the network, which is planning to move from a proof-of-work (PoW) network consensus to a proof-of-stake (PoS) network consensus aimed at saving the network from near-paralysis and reducing the amount of energy needed to execute transactions on the network as the PoS is known to consume far less energy than the PoW.
Ether is currently trading at $3,550 per token, down 2.23% as of the time of this writing.