Ethereum network burns $395K ETH per hour after London upgrade

In Ethereum’s London upgrade on 5 August, Approx 2.3 ETH is being burnt every minute through the new transaction fee mechanism.

Ethereum network burns $395K ETH per hour after London upgrade

The London hard fork went live on this week on Wednesday, ushering in the EIP-1559 upgrade which adjusted gas fees. This introduced a mechanism that burns some of the base fees collected.

Since the London hard fork lived around 14 hours ago approximately total 3395 ETH burnt according to the various counters available. 

According to Etherchain reports, an average burn rate of 2.36 ETH per minute equals $6,596 per minute or nearly burns $395K ETH per hour at $2794.9 price. an alternative counter reports a total 3390 ETH burn worth of $9.5 M at the ETH price around $2798. The tracker reports stated that the OpenSea NFT marketplace is the top burner of ETH with 374 ETH worth of nearly $1M dollars, since the upgrade was launched.

Uniswap’s V2 was on second number, which has burner 263 ETH, or $735,611, at the price $2797. Uniswap founder Hayden Adams, said on burn rate that if the burn continues at the same rate, protocol could burn as much as 350K ETH or almost $1 billion per year.

The Bankless Defi newsletter gave some figures to predict the impact on future supply. Manual calculation and predictions are somewhat difficult since the base fee is between 25% and 75% of the total transaction fee.

It modeled burn rates within this range using data on fees generated in 2021 and concluded:

“Annualizing these figures, this means that between 800,000 — 2.4 million ETH is projected to be burned in 2021.”

When combined with the reduction in block reward issuance from the merge to proof-of-stake, the fee burning could lead to Ethereum having a deflationary supply, which would see it fulfill the increasingly used meme of “ultrasound money”.

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