- In eight months since the introduction of EIP-1559, more than 2 million ETH have been burnt.
- All eyes are currently on the Ethereum 2.0 development as the network switch is likely to happen this year.
Last August 2021, Ethereum introduced the EIP-1559 protocol that brings along an ETH burning mechanism to control gas fees. Eight months later, Ethereum has burnt a staggering $6 billion worth of ETH so far. Meaning, the world’s second-largest crypto has destroyed a total of 2 million ETH ever since introducing this mechanism.
Watch The Burn has created a dashboard monitoring the entire burn mechanism. As of press time, it shows that the Ethereum network has burned a total of 2,001,093 ETH which is now out of circulation.
Ethereum hosts a large number of DeFi, DApps, and other smart contracts on the platform. It’s like a giant decentralized computing machine with servers distributed across the world. However, Ethereum has faced major issues with network congestion. This has ultimately resulted in the surge of gas fees which has become a pain for investors and network users.
The Ethereum Improvement Proposal 1559 has restructured the network fee. The EIP-1559 splits the fee into base fees and tips awarded to the miners. The network then burns the base fee and removes the equivalent ETH moving it out of circulation. This ultimately creates a deflationary effect resulting in fewer and fewer Ethereum.
Ethereum 2.0 coming very soon
The wait for Ethereum 2.0 is likely to end this year. As per Ethereum co-founder and ConsenSys CEO Joseph Lubin, the Ethereum 2.0 launch can happen as early as Q2 2022. During this year’s Camp Ethereal, Lubin also said that the Proof-of-Stake (PoS) Ethereum 2.0 “Consensus Layer” will improve the network’s transaction speed while lowering costs. It “will lay to rest Ethereum’s carbon or energy footprint problem,” he added.
The PoS mechanism of Ethereum 2.0 is certainly more environmental-friendly in comparison to the existing PoW network. Furthermore, it reduces the risk of a 51 percent attack on the network along with added security. Lubin explained:
Another exciting thing about moving to proof-of-stake is that proof-of-work requires a lot of issuance of ether [the term used to describe Ethereum the cryptocurrency rather than the network]in order to incentivize these people with heavy infrastructure, to lend their resources and validate transactions on the network. So if you have very light infrastructure, then you can issue much less ether per block that’s constructed.
On the other hand, Ether (ETH) has been showing strength recently with its price moving closer to $3,000 levels. Furthermore, there’s some fresh buying initiated by Ethereum whales. On-chain data provider Santiment noted:
Ethereum has surged back above $2,900 for the first time since March 2nd, and whale transactions are on the rise big time. Yesterday was the first day with over 7,000 $100k+ transactions on the $ETH network since the #war news broke.