Record for Ethereum: the week at $350 million


Destruction that hits hard – The London hard fork was deployed on the Ethereum (ETH) network on August 5, 2021. This introduced EIP 1559, which aimed to change the system of fees on the network. Since then, the latter has systematically destroyed part of the transaction fees.

Burn, burn… Ethereum burns

Transaction fees are the subject of incessant criticism on Ethereum. In fact, the network has for many years faced major problems of congestion. Many solutions have been put in place to lower and better predict the evolution of fees on Ethereum.

Without going into details, theEIP 1559 introduces 3 types of fees for each transaction taking place on the network:

  • The “base fee” : which represents the fixed fees to be paid for any transaction;
  • L’“inclusive fee” : which represents the share paid to the minor;
  • the “cap fee” : which represents the maximum to spend for a given transaction.

Thus, a mechanism called “burn”, implies that the network systematically destroys the base fee.

In total, this mechanism has destroyed 1.5 million ETH since its deployment. This represents a total of over $5 billion in ETH tokens, permanently destroyed.

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350 million dollars destroyed in one week

As we have just seen, the destruction of ETH is closely linked to the use of the network. Thereby, the more there are transactions performed, the greater the number of ethers destroyed by the EIP 1559.

Last week was particularly busy for the Ethereum ecosystem. Indeed, the deployment of the NFT sales platform LooksRare, coupled with the disastrous WTF token airdrop, generated a large number of transactions on the network.

For once, this increase in the number of transactions has led to a heavy congestion of the network, once again driving up transaction costs.

This phenomenon is such that 107,562ETH have been destroyed in the space of only 7 days. This represents 7% of all ETH destroyed by EIP 1559 since its deployment last August.

In dollars, this represents 351 million destroyed in the last 7 days. For comparison, this represents a third of the volume recorded by the decentralized exchange Uniswap V3 over a week.

This massive destruction had significant impacts on the scale of Ethereum. Indeed, over this period, the issuance of ETH found itself deflationary. Indeed, 107,562 ETH were destroyed, against only 95,057 new ethers created by mining blocks.

Burn statistics over the last 7 days – Source: watchtheburn

The move to proof of stake should exacerbate the reduction in ETH issuance. This transition will take place through the deployment of The Merge. This deployment is scheduled for around June 22.

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