The theoretical deflationary properties of the latest Ethereum update have been verified in approximately 800 “deflationary blocks” created so far.
An increase in network transaction fees implied a greater amount of ETH burned, resulting in at least two hours of deflationary movement in Ethereum. The network has been under heavy load for the past few days and much more gas has been flared.
A few hours ago, the ‘ETH Burn Bot’ recorded that 545 ETH were burned in a period of one hour. With Ethereum emission reported at 532 ETH per hour, the momentary balance in that brief period indicated asset deflation by negative 13 ETH.
A larger deflationary burn was detected by the ETH Burn Bot a few hours later, when 945 tokens were burned in one hour, resulting in a temporary negative emission of -417 ETH. The calculation indicates an annualized deflation rate of -3.12%.
945.1184 $ETH burned last hour.
Issuance: 528.000 ETH
Net Change: -417.1184 ETH
2021-08-10 22:00-23:00 UTC
Last Block: 13000300
Cumulative: 24,942.1282 ETH
— ETH Burn Bot (@ethburnbot) August 10, 2021
945.1184$ ETH burned in the last hour.
Issue: 528,0000 ETH
Net change: -417.1184 ETH
10/08/2021 22:00-23:00 UTC
Last block: 13000300
Accumulated: 24,942,1282 ETH
– ETH Burn Bot (@ethburnbot)
When the amount of Ether burned is greater than the reward to the miners, deflationary blocks are created and the ETH stock temporarily decreases. This was noted in a tracker from the consulting firm Carbono, which reports that there have been 791 deflationary blocks so far. Deflationary blocks are characterized as blocks where the token burn rate exceeds the mined ETH.
When hard fork London was implemented on August 5th, it introduced the EIP-1559 update. Long-awaited, she promoted the adjustment of the network’s transaction fee calculation system. Part of this adjustment introduced a mechanism that burns a portion of the base fees charged for each transaction.
According to ultrasound.money, which tracks the amount of tokens burned, 25,600 ETH have been burned so far. At current prices, this equates to about $80 million burned in just under a week.
The Ethereum economy is not expected to see sustained deflation until the burning of transaction fees is combined with a reduction in the emission of rewards per mined block. This should happen as a result of the transition from the proof of work (PoW) to proof of participation (PoS) consensus model at some stage in 2022.
Related: Ethereum Network burns $395,000 ETH per hour after London update
However, not all news is good for Ethereum users as the price of gas has risen again. According to Bitinfocharts, the average transaction price rose to $20, after hitting a low of about $4 at the end of July. The Etherscan gas tracker is reporting fees of up to $28.60 for a swap on Uniswap.
The increase in demand for Ethereum block space was driven by NFTs. OpenSea, Gala Games, Vox and Axie Infinity marketplaces are among the top 4 responsible for gas flaring, with a combined total of 2,200 ETH, or $7 million burned so far.
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