The Ethereum blockchain is burning up
According to the latest available data, the amount of Ethereum destroyed by EIP-1559, a recently deployed update that burns transaction fees that were previously paid to miners, has topped 200,000 ETH (equivalent to around $675 million at the prices at which it was burned).
According to ethburned.info, a total of 204,281.8 ETH has been burned, representing a value of around $682 million.
At the current rate of exchange, around $1.2 million worth of ETH, or 300 ETH, is burned per hour. Today, a total of 4,877 ETH has been burned thus far. The network burned 10,675 ETH yesterday, and it burned 13,839 ETH on Friday, according to the latest data.
It was introduced in early August as a means of expediting the upgrade to Ethereum 2.0, the next generation version of the Ethereum blockchain that transitions the blockchain from proof-of-work.
This is a computationally intensive method of verifying transactions, to proof-of-stake, which is a more environmentally friendly algorithm that consumes significantly less energy.
In order to accomplish this, EIP-1559 removes ETH from circulation rather than sending it to the miners who confirm transactions through proof-of-work computations. The switch to EIP-1559 was unpopular with miners who had spent a lot of money on graphics equipment that were specifically designed for Ethereum mining.
The proof-of-stake version of Ethereum’s blockchain will “merge” with the proof-of-work version of the blockchain later this year or early in 2022. The implementation of smart contracts on Ethereum 2.0, on the other hand, will take several years before it achieves the capabilities of Ethereum 1.0.
One of the expected side effects of EIP-1559 was that fees would be reduced, or at the very least become more predictable, as a result of the legislation. However, fees on Ethereum are still extremely high—and are continuing to rise as a result of the continued comeback of non-financial-transaction (NFT) applications.
For example, at the time of this writing, one exchange on Uniswap costs $76.31, whereas an ERC-20 transfer costs $24.8. The most gas-guzzling node on the Ethereum network is the NFT marketplace OpenSea, which consumed 11.65 percent of all gas on the network in the last three hours and 15 percent in the previous day.
The miners, no doubt, are envious of the situation.