More than 30,000 ETH has already been burned on the blockchain, according to the OkLink blockchain explorer and EthBurned service, with an additional 0.7 ETH adding in with each block.
Following the recent update, the blockchain community has written a slew of speculative and analytical pieces about Ethereum’s deflationary future. This is due to the fact that the network update includes a fee-burning feature. Currently, instead than going to miners, all transaction fees are burnt with each given block.
How much ETH is consumed each day?
Every day, approximately 4,500 ETH are burned. We may see a greater number due to higher costs and a higher number of transactions during periods of heavy network congestion.
According to recent analysis, over two million Ethereum may be burned in the coming year alone. Ethereum will become a deflationary asset if a substantial number of coins are burned. Ethereum’s future inflation rate is expected to reduce by 2.73 percent, making it lower than Bitcoin’s current inflation rate.
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How does the fee-burning process affect the price of Ethereum?
With a 75 percent price increase in the last 20 days, the price of Ethereum has risen significantly. It’s difficult to say if the effect is due to the newly introduced fee-burning method or the broader positive trend in the cryptocurrency market, which practically every altcoin follows.
After the entire network and miners have had time to operate with the new fee structure for a long period of time, the long-term effect of the newly adopted EIP-1559 will occur in the coming years.