Eric Wall, chief investments ifficer of Arcane Assets Web3 VC firm, explains crucial importance of EIP 1559 for ETH supply
Which blockchain – Bitcoin or Ethereum – will be the first to reach the “net emission zero” point, which is arguably the most crucial milestone for circulating supply?
Two percent of Ethereum (ETH) supply destroyed for good
Mr. Wall has taken to Twitter to share his estimations of the effects EIP 1559 and corporate-driven aggressive purchases have had on the Ethereum (ETH) and Bitcoin (BTC) supplies.
As 2.4 million Ethers have been burned since the activation of the EIP 1559 upgrade (which allowed Ethereum to partially destroy transaction fees), 2% of the aggregate supply of Ethereum (ETH) will never be available on the market.
Even amid the crypto recession, this monstrous sum is equivalent to $4.26 billion. At the same time, all MicroStrategy purchases erased just 0.7% of Bitcoin (BTC) supply—and this can be restored should MicroStrategy start selling its riches.
As such, Ethereum (ETH) is approaching the ultimate scarcity milestone (zero net emission points) much faster than the first cryptocurrency, Wall noted:
Ethereum will likely reach 0% net issuance a full 100+ years before Bitcoin.
But is it good for Ethereum (ETH)?
However, it is still unclear whether the network will be able to retain its security when its node operators are only supported by transaction fees, which is one of the “least reliable” sources of revenue.
Sergio Demian Lerner, chief scientist of Bitcoin-centric firm IOVLabs that attempts to leverage Bitcoin (BTC) as a consensus layer for smart contracts’ settlement, highlights that EIP 1559 can also be lifted:
But EIP-1559 can be removed by a minority of miners to get all fee revenue. Ultrasonic Money will make a lot of audible noise when it breaks.
As covered by U.Today previously, EIP 1559 was implemented during the London hardfork in August 2021.
Since 2019, it had been strongly opposed by Ethereum (ETH) mining pools.
