The new transaction fee mechanism introduced in Ethereum's London upgrade on Thursday is burning about 2.3 Ether (ETH) every minute.
On Thursday of this week, the much-anticipated London hard fork went live, bringing in the Ethereum Improvement Proposal (EIP) 1559 update, which reduced gas fees. As part of the adjustment, a mechanism was implemented that burns some of the received base fees.
According to the different counters available, the total amount of ETH burned since the upgrade went live is around 3,395 ETH. The average burn rate on Etherchain is 2.36 ETH per minute. At current pricing, this corresponds to $6,596 each minute, or roughly $395,000 in ETH blowing up in smoke every hour.
At current ETH values of roughly $2,800, an alternate counter called Ultrasound.money claims a total burn of 3,390 ETH worth a stunning $9.5 million. The popular nonfungible token marketplace OpenSea is the top ETH burner, according to the tracker, with 374 ETH, or slightly over $1 million, lost since the upgrade was launched.
Uniswap's v2 came in second with 263 ETH burned, valued $740,000 at the time of writing. Uniswap founder Hayden Adams commented on the burn rate, claiming that if current trends continue, the protocol may burn as much as 350,000 ETH each year, or nearly $1 billion.
In an attempt to forecast the impact on future supply, the Bankless DeFi newsletter tossed around some numbers. Manual calculation and forecast are challenging because the base fee ranges between 25% and 75% of the total transaction fee.
It used data on fees produced in 2021 to calculate burn rates within this range and came to the following conclusion:
“Annualizing these figures, it is estimated that between 800,000 and 2.4 million ETH will be burned in 2021.”
Fee burning, when combined with the reduced block reward issuance from the merge to proof-of-stake, might result in Ether having a deflationary supply, fulfilling the increasingly popular myth of "ultrasound money."
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