Nearly $170 million worth of the second-largest cryptocurrency by market capitalization, ether, have been burned since the Ethereum network’s London hard fork went live on August 5.
According to data from tracking website Watch the Burn, at the time of writing 52,660 ETH had been burned, equal to nearly $170 million. Over 3 tokens have been burned every minute, with issuance still being above that level.
The London hard fork included the implementation of Ethereum Improvement Proposal (EIP) 1559, which changed the way transaction fees on the network work. Instead of an auction system, users now pay a base fee for their transaction to be processed by miners, and can alternatively tip miners to get their transactions to be processed faster.
Miners aren’t paid the base fee as it could incentivize them to artificially congest the network to keep it high and earn more. Instead, the base fee is burned, effectively removing ether from circulation forever. It rises when there’s higher demand, and drops when demand is lower.
The supply reduction helps Ethereum’s inflation rate drop, and could make the cryptocurrency deflationary if the burn rate gets high enough. Data shows so far that out of 97,212 ETH issued, over 52,660 have been burned.
Investors have been bullish since the upgrade went live, with the price of Ethereum moving from around $2,700 on August 5 to nearly $3,200 at press time, according to CryptoCompare data.
In a note covered by Business Insider, Edward Moya, a senior market analyst at trading platform Oanda, said:
A massive upgrade for ethereum should prove to be very bullish for the cryptocurrency’s long-term outlook.
As CryptoGlobe reported, former Goldman Sachs executive Raoul Pal has revealed he believes Ethereum is the “greatest trade” setup that he has ever seen as the cryptocurrency’s fundamentals suggest it has a large upside ahead of it.
Pal revealed that Ethereum’s fundamentals are forming, in his opinion, a better setup than the one Bitcoin had in March 2020, when its price plunged over 50% to $4,000 before it recovered. Since then, the price of BTC surged to hit a new all-time high near $64,000.
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