Ethereum first reached deflation within the network after activating EIP-1559
As part of the EIP-1559 update, the Ethereum team intended to create deflationary pressures within the Mainnet, and it appears that their plan has worked even better than they expected. During this day, more ETH tokens were burned than minted.
It was assumed that EIP-1559 will be able to slow down the growth rate of the Ethereum supply that has formed in the cryptocurrency market. The innovation not only slowed down this indicator but also made it so that the supply began to gradually decrease!
EIP-1559 was intended to make changes to the coding of the Ethereum blockchain, which would allow for larger block sizes to send more transactions on the network. Today it has a hard time, and in many ways, the reason for this was the boom of non-fungible tokens sold by users every month for tens of millions of dollars after they were minted on the Ethereum blockchain. Credit protocols such as Uniswap and Aave also brought in some load share, using the already limited resources of the main network, which regularly suffers from congestion.
Even though EIP-1559 significantly reduced the growth rate of Ethereum supply, experts believe that it will not necessarily reduce the supply itself. Because with every block mined, miners still receive ETH. Hence, as long as the number of new ETH they mined exceeds the burnt base fees, the Ethereum supply will continue to increase.
Over the past 24 hours, the supply growth has managed to turn negative, as more ETH tokens were burned than miners received from 12,500 to 13,220 ETH at a burning rate of 9.16 ETH per minute. This was the first time after the implementation of EIP-1559 when Ethereum still managed to comply with his team's “deflationary plan”.
According to Ultrasound Money, more than 188,000 Ethereum tokens have been burned since EIP-1559 took effect on August 5, equivalent to more than $730 million at Huobi's current exchange rate. Of course, this also affected the price of the asset, which has grown from $2,500 in early August to $3,900 today.
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