Ethereum EIP-1559 became operational in the first week of August. An upgrade that had been eagerly anticipated by the broader market had finally arrived. The network upgrade had gone off without a hitch. And, as of this writing, the fee burn mechanism implemented with this upgrade is functioning properly. In the last 24 hours, I’ve burned more than 3 ETH per minute.
With the network up and running, the question of what the impact has been on the network thus far arises. Such a significant upgrade is undoubtedly going to have a significant impact on a network like Ethereum. And so it has been. The network has seen some noticeable changes as a result of EIP-1559. This includes everything from the token’s price to how transactions are carried out. And even how much miners are paid per block for their mining efforts.
ETH Supply has been reduced.
One noticeable change on the network has been the decrease in coin supply. As of this writing, the total number of ETH coins burned has surpassed 33,000. Normally, this number of tokens would have circulated. This would occur as a result of miners receiving ETH in exchange for the blocks they mine.
This demonstrates to the broader market how much ETH was being pumped into circulation via mining. Over 33,000 new ETH would have been sent directly into the market in a week.
Token burns are essentially coins sent to addresses with non-accessible private keys. As a result, the coins sent to those addresses are no longer in circulation. A third of the ETH obtained through mining that would have been placed in the market has now been removed from circulation. As a result, approximately 30% of total net issuance is accounted for.
Ethereum is becoming deflationary.
While the network as a whole is not yet completely deflationary, there have been instances where blocks have become deflationary. In some cases, the fee pressure caused by EIP-159 has caused the ETH burned to be greater than the two ETH issued per mined block in the Ethereum network. Although this has only happened in a few cases, it demonstrates that Ethereum has the potential to become deflationary in the long run.
Because of the reduced supply, the value of the digital asset will rise. Due to the possibility of more demand in the market than supply, ETH investors will see more value in the asset. As a result of the scarcity of the asset, the price would skyrocket.
The price of the digital asset has been steadily rising for the better part of this week. Trying to stay mostly within the $3,000 range.