- EIP-1559 is touted as a tool to reduce the cost of ethereum.
- The milestone of 2 million ETH will be reached in the coming days.
Last August, the London Hard Fork was launched on Ether. Through this fork, the EIP-1559 proposal was incorporated, which includes a system to destroy Ether (ETH) when commissions are paid. The protocol is designed to make ETH a deflationary asset, helping to reduce high network costs in the long run. The milestone of destroying 2 million ETH, equivalent to $5.2 billion, is now about to be reached.
Although there is still some distance to go to reach this number, it could be reached in less than a week. This can be seen in the data displayed by Watch The Burn ("Mira la quema" in Spanish), a portal dedicated to the study of statistics on EIP-1559.
The average weekly burn is about 25,000 ETH, which would put the approximate date at mid-March, as the amount of ETH burned at the end of this report is over 1,969,089.
The amount of ETH destroyed varies depending on network activity. After the "NFT frenzy" at the end of 2021, which led to a historic spike in fees, congestion has eased since the beginning of the year.
How Ether fees are affected by ETH destruction
Prior to activating EIP-1559, some evangelists announced the launch of the protocol as a measure to stop the high commissions on Ether once and for all. Last August, when EIP-1559 was launched, these fees were about $ 40 per transaction. However, according to CriptoNoticias, the activation did not have an immediate impact, as commissions peaked at more than $ 60 in the months of October 2021 and November 2021.
Now, regarding the hypothesis of transforming ETH into a deflationary asset, as some have predicted – as in the case of Ryan Saan Adams, CEO of Mythos Capital – there is still a long way to go.
Data on the current status of the network and ETH destruction in EIP-1559. Source: Watch Destruction. What is missing from Ether Deflation?
In order for Ether to become a deflationary cryptocurrency asset, more ETH would need to be destroyed than issued. According to Watch The Burn, the current daily emissions are around 13,000 ETH, while the destruction is only 2,500 ETH, or just 18.5%.
Currently, the destruction process needs to grow by 600% to reach optimal deflation levels. While ETH has close to 120 million coins in circulation, this number will be the biggest problem according to calculations by Justin Drake, a researcher at the Ether Foundation. Recent data seems to indicate that this mark will be surpassed.
The developer explained that deflation will only reach Ether when the current blockchain is merged with that of Ether 2.0. When this happens, the amount of ETH in circulation will gradually decrease.