EIP-1559 made 500,000 Ethereum coins nonexistent in just a few months
Half a million Ethereum have been burned on the Ethereum network according to the Etherchain website. At the time of going to press, the amount burned is equivalent to $ 1.7 billion. Previously, the same amount of funds would have been received by Ethereum miners and most likely realized on the market.
Ethereum combustion mechanism
With the EIP-1559 update, the charging mechanism has been implemented on the Ethereum network. Since August, the miners’ fee that was previously used to reward miners for moving transactions through has been changed to a base fee. Now the reward for minors is presented as a tip, while the base fee is burned.
With an increased number of transactions on the Ethereum network every day, more coins are getting burned, which is progressively making Ethereum a deflationary asset with more coins burned than distributed.
Positive market effect
As the number of coins on the network constantly decreases with the fee-burning mechanism present, it should have a positive effect on the price of Ethereum. With constantly reducing supply and rapidly rising demand, traders and investors tend to accumulate an asset while expecting a price increase.
The effect has already been reflected in Ethereum’s price, with its 26% growth in October. Right after the update, Ethereum rose over 20%, but then quickly returned to almost 30%.
At press time, Ethereum is trading around the price of $3,500 with 5% daily growth.
