After the latest hard fork of Ethereum, the network has started to burn coins in every transaction. The base fee that the miner first received is now being destroyed, making the network deflationary. This new upgrade which is called the EIP1559 was implemented 25 days ago, and Ethereum worth $432M has been burnt in this short period. To visualize what that means, Bitcoin.com reported that the burned ETH could have bought 2000 medium-sized homes. This is what happened in just 3 weeks; consider what will happen in 6 months or a year.
$432M Ethereum burnt
Higher the number of tokens less is the value per coin. When we consider the real value of any cryptocurrency, we should look at the market cap. As of now, Ethereum has a market cap of $374 billion, which is huge. In fact, during its rally past $4000, it even neared $500 billion. Now considering it has such a huge market cap and the latest upgrade that makes ETH deflationary makes it is a really powerful investment. The latest EIP1559 upgrade benefits long term investors and hodlers hugely.
In fact, in just 25 days, $432M of Ethereum was burnt. Even though this is not a linear scale, if we just assume it is, still over $6.2 billion ($432M *(365/25)) worth of ETH will be burnt in a year. And considering that the number of Ethereum transactions are increasing very fast and so is the adoption, a lot more of it could be destroyed in a year.
The most dominating sector where ETH has been burned are NFTs. Out of the total 136,606 ETH tokens, 21,105 was burned due to the 2.2 million Ether transactions. At the same time, we have ether transactions that took up nearly 10,845 Ethereum tokens.
Is Ethereum going to benefit from this?
It is really difficult to say that was EIP1559 a good decision. On the one hand, this is going to pump the price of the token higher and benefit long term hodlers. But on the other side, it will impact those who actually use the network for transactions. This is because the gas fees are surely going to increase and have already doubled in the last week. So, it could affect the widescale adoption, and people could choose to invest in tokens that are much faster and have low fees like Solana (which is pumping hard, by the way).
What are your thoughts on the $432M Ethereum burnt in just 25 days? And do you think the EIP1559 was a good decision? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.