Ethereum confirms deflationary process as gas prices rise on the network

The theoretical deflationary properties of the latest Ethereum update have been verified in around 800 “deflationary blocks” so far.

An increase in network transaction fees implied a greater amount of ETH burned, resulting in at least two hours of deflationary movement in Ethereum. The grid has been heavily used in the past few days and a lot more gas has been flared.

A few hours ago the ‘ETH Burn Bot’ recorded that 545 ETH were burned in a period of one hour. With an Ethereum emission of 532 ETH per hour, the current balance in this short period of time indicated an asset deflation of minus 13 ETH.

Major deflationary burn was detected by the ETH Burn Bot a few hours later when 945 tokens were burned in one hour, resulting in a temporary negative emission of -417 ETH. The calculation results in an annualized deflation rate of -3.12%.

$ 945.1184 ETH burned last hour.

Output: 528,000 ETH
Net change: -417.1184 ETH
Annualized: -3.12%

2021-08-10 22: 00-23: 00 UTC
Last block: 13000300
Cumulative: 24,942,1282 ETH

– ETH Burn Bot (@ethburnbot) August 10, 2021

$ 945.1184 ETH burned in the last hour.

Edition: 528 000 ETH
Net change: -417.1184 ETH
Annualized: -3.12%

08/10/2021 22: 00-23: 00 UTC
Last block: 13000300
Cumulative: 24,942,1282 ETH

– ETH burn bot (@ethburnbot)

If the amount of ether burned is greater than the reward for the miners, deflationary blocks are created and the ETH share temporarily drops. This was noted on a tracker from consulting firm Carbono, which reports there have been 791 deflationary blocs to date. Deflationary blocks are called blocks where the token burn rate exceeds the ETH mined.

Number of deflationary ETH blocks. Source: carbon.com

When Hard Fork London was implemented on August 5th, the EIP-1559 update was introduced. Long awaited, she promoted the adaptation of the network’s transaction fee calculation system. Part of this adjustment introduced a mechanism that burns off some of the basic fees charged for each transaction.

According to ultraschall.money, which tracks the amount of tokens burned, 25,600 ETH have been burned so far. At current prices, that’s about $ 80 million burned in just under a week.

The Ethereum economy is not expected to experience prolonged deflation until the burning of transaction fees is coupled with a reduction in the emission of rewards per block mined. This should happen through the transition from the Proof of Work (PoW) to the Proof of Participation (PoS) consensus model sometime in 2022.

Related: Ethereum Network Is Burning $ 395,000 ETH Per Hour After London Update

Not all news is good for Ethereum users, however, as the price of gas has risen again. According to Bitinfocharts, the average transaction price rose to $ 20 after hitting a low of around $ 4 in late July. The Etherscan gastracker reports fees of up to $ 28.60 for a swap on Uniswap.

The surge in demand for Ethereum block space has been driven by NFTs. OpenSea, Gala Games, Vox and Axie Infinity marketplaces are among the top 4 responsible for gas flaring, with a total of 2,200 ETH or $ 7 million burned so far.

CONTINUE READING

Comments are closed.