Two weeks after the London update, $225 million in ether was “burned” – Money Times

The base rate is burned, that is, withdrawn from circulation, and can no longer be used in the network, adding a deflationary element to the Ethereum network (Image: Unsplash/Executium)

In August 5, the net Ethereum implemented a major update called London.

It included the Improvement Proposal (EIP) number 1559, which aimed to stabilize the high rates, which always rise when there is a high demand of blockchain Ethereum, home to a multitude of financial applications.

In the last two weeks since the release of the update, the network has already burned about 72 thousand ETH — approximately US$ 225 million — notes the decrypt.

(Image: ETHBurned)

EIP-1559 started to “burn” ether (ETH) – O token native of the network — that is, it started to take them out of circulation — sending them to a blockchain address that no one has access to — in order to increase asset scarcity and handle high transaction processing demand.

Previously, these burnt ethers were in the form of “gas” fees paid for which transactions fosses transmitted to the Ethereum blockchain. Users pay gas fees to convert one currency to another or to transfer non-fungible tokens (NFTs).

These gas fees were paid to miners (validators) of the Ethereum network for their work on ensure security and blockchain functionality. Now that these ethers are being “destroyed”, miners rely on tips that blockchain users are willing to pay.

Decrypt recalls that the network used to price gas according to supply and demand rules. At the moment, a user needs to spend around 24 gwei ($1.64) to process a single transaction.

“Gwei” is a unit of measure used for gas rates on the grid: 0.000000001 ETH = 1 gwei (Image: EtherScan/Gas Tracker)

Gas fees become more expensive for more complex transactions, such as transferring an NFT. THE OpenSea, NFT trading platform, is the largest “SPENDER”, responsible for burning 8,750 ETH (about US$28.4 million) since the implementation of EIP-1559.

However, the London update precedes a major migration of the Ethereum network from a consensus model proof-of-work (PoW) — which depends on the cryptocurrency mining and so, consumes electricity – for one proof-of-stake (PoS) model — which depends on the trust and contribution of long-term validators.

The expectation is that this migration, called Ethereum 2.0, happen in 2022.

To demonstrate their confidence in ETH 2.0, thousands of users have already contributed their ethers to staking deposit agreement, which will keep the assets “blocked” until the new network is in the air.

Validators who want to help secure the future blockchain — which will be a merger between the current blockchain (ETH 1.0) and the future blockchain (ETH 2.0) — need to staking 32 ETH.

(Image: EtherScan/ETH2 Deposit Contract)

At this moment, the Ethereum 2.0 staking contract has almost US$23 billion on locked assets. the ether, the second largest cryptocurrency in the world, it’s costing US$ 3.2 thousand (or BRL 17.8 thousand).

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