Ethereum’s EIP-1559 has already burned $ 100 million in gas fees
EIP-1559 is currently keeping the crypto market busy. Ethereum’s controversial but long-awaited London hard fork already shines with its deflationary properties.
The Ethereum network has been so heavily loaded in recent days that much more gas has been burned than usual – a surge in transaction fees meant that the offer could be viewed as deflationary for at least two hours.
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EIP-1559 burns charges en masse
Ethereum’s London Hard Fork consists of five so-called “Ethereum Improvement Proposals”, Each of which involves a number of code changes. The best known and probably the most discussed is EIP-1559.
EIP-1559 changed the way transaction fees are calculated on the network. Instead of the fees going directly to the miners who process and validate the transactions, a kind of basic fee goes to the network – and is immediately destroyed. In this way, EIP-1559 enables users to better estimate how much a transaction will actually cost.
There is therefore no longer any blind estimation in order to determine the gas fees. The Ethereum protocol now algorithmically sets transaction fees based on total demand on the network.
EIP-1559 is really meant to create an ecosystem that encourages lower gas fees. Sometimes users are willing to pay a lot to get into a block. This problem is to be remedied by importing a basic fee.
Will the transaction fees be reduced or not?
Now that even many of the biggest Ethereum fans have been annoyed by the highly unpredictable and sometimes even exorbitant transaction fees, that sounds like a reduction in transaction fees – doesn’t it?
In reality it looks a bit different, because gas prices have risen again. The average transaction price has climbed quite a bit from a low of around USD 4 at the end of July – namely to around USD 20.
Gas Now’s gas tracker even reported around $ 24 for a token swap on Uniswap.
Source: Gasnow.com
What could be the reason? NFT in particular are currently causing a lot of movement on the Ethereum blockchain. Above all, the OpenSea Marketplace, Vox from Gala Games and Axie Infinity are among the top four gas destroyers – with a total of around 2200 ETH.
According to ultrasound.money, more than 32,000 ETH have been burned so far – this corresponds to more than USD 100 million in gas fees.
Deflationary pressure only arises on the condition that the fees burned exceed the new issues. This is only the case in times of extreme fee intensity.
EIP-1559 is currently keeping the market busy. Even if the transaction fees are currently still high, one can still assume an improvement in the user experience – the increasing number of transactions speaks volumes.
It remains to be seen how the gas fees will develop once infrastructure providers, such as wallets such as Metamask, have adapted to the new circumstances under EIP-1559. However, one should not assume that the Ethereum network will experience sustained deflation until the switch to proof-of-stake has taken place.
