Ethereum Network burns $395,000 ETH per hour after London update

Approximately 2.3 Ether (ETH) is being burned every minute through the new transaction fee mechanism introduced in Ethereum’s London update on Thursday (5).

The long-awaited hard fork London went live on Thursday of this week, kicking off the Ethereum Improvement Proposal (EIP) 1559 update that has adjusted gas rates. Part of this adjustment introduced a mechanism that burns off some of the base fees charged.

The total amount of ETH burned since the update went live is approximately 3,395 ETH, according to the various counters available. Etherchain reports an average burn rate of 2.36 ETH per minute. That equates to $6,596 per minute, or about $395,000 of ETH rising in metaphorical smoke every hour at current prices.

An alternative counter called Ultrasound.money reports a total burn of 3,390 ETH worth $9.5 million with current ETH prices of around $2,800. The tracker reports that the popular OpenSea non-fungible token market is the top ETH burner with 374 ETH, or just over $1 million dollars, destroyed since the update was released.

In second place was Uniswap’s v2, which burned 263 ETH, worth $740,000 at the time of writing. Uniswap founder Hayden Adams commented on the burn rate, saying that if things continue at the same rate, the protocol could burn up to 350,000 ETH, or nearly $1 billion, per year.

It’s been 2 hours since the launch of EIP-1559

@Uniswap (v2 + v3) is doing its part by burning ~80 ETH so far

❤️‍❤️‍ At this rate, Uniswap alone is burning 350,000 ETH – about $1 billion – a year

Congratulations to everyone who made EIP-1559 happen. Big win for Ethereum

– Hayden Adams (@haydenzadams) August 5, 2021

The Bankless DeFi newsletter released some numbers in an attempt to predict the impact on future offerings. Since the base rate is anywhere between 25% and 75% of the total transaction fee, manual calculations and predictions are difficult.

He modeled burn rates within this range, using rate data generated in 2021, and concluded:

“Annizing these numbers, it means that between 800,000 – 2.4 million ETH are projected to be burned in 2021.”

When combined with the reduction in the merger’s block reward issuance for proof of participation, the fee-burning could lead to Ether having a deflationary supply, which would make it comply with the increasingly used meme of “ultrasound money” (super money).

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