Ethereum, the second largest cryptocurrency by market capitalization after Bitcoin, underwent a major upgrade on August 5th this year. The latest upgrade, called the London Hard Fork, consisted of five Ethereum Improvement Proposals (EIPs). This included EIP 1559, which aimed to change the pace and create incentives for mining the cryptocurrency. EIP 1559 also responded to criticism of Ethereum for rising network congestion and transaction costs by introducing a new burning method that simplified the process. Since the upgrade, more than 3 lakh Ethereum coins (ethers) valued at over $ 1 billion (about 7,350 billion rupees) have been burned or withdrawn from circulation.
OpenSea, the popular NFT marketplace, is responsible for most of the Burns on the Ethereum network and represents around 43,801 Ether Coins valued at nearly $ 148 million. This is followed by traditional Ether transfers, which include 25,999 Ether Coins valued at $ 88 million (approximately Rs.646 billion).
According to the cryptanalysis group Dune Analytics, 3,09,973 coins have been burned so far. Their total value is $ 1.05 billion (approximately 7,717 billion rupees) that is lost forever.
EIP-1559 changed Ethereum’s rate of fees to a new scheme that makes Ether deflationary. It was able to reduce the amount of ETH produced daily and increase the amount of ether burned. In the new scheme, you can burn a large amount of transaction fees – called the “base fee” – instead of sending them to the miners. According to the EIP 1559 proposal, this was done to offset Ethereum inflation while miners continued to pay the block premium and priority fee (the maximum fee users are willing to spend to add their transaction to a block).
One of the main reasons for the high rate of ether burned is the high transaction fees of Ethereum (gas fee). Ethereum processes an estimated 1.2 million transactions on the network every day.
According to CoinMarketCap, Ether was trading at $ 3,517 (approximately 2.58 lakh) at the time of this writing.
Ethereum is a decentralized open source blockchain with smart contract functionality and Ether is its native cryptocurrency. It is represented by the symbol ETH.
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