EIP-1559 burned 500,000 Ethereum coins in just a few months. So why is this news important for the Ethereum market? Here are all the details.
According to the Etherchain website Ethereum half a million Ethereum was burned on its network. According to the current ETH value, the amount burned is equal to 1.7 billion dollars. Previously, the same amount of funds was received by Ethereum miners, and these coins were started to be exchanged on the market.
Ethereum Burning Mechanism
With the EIP-1559 update, the Ethereum network activated a fee burning mechanism. Since August, the miner fee, which was previously used to reward miners for transfer transactions, has been replaced by the base fee. Currently, the miners are offered as rewards while the base wages are burned.
More and more coins are being burned on the Ethereum network following increasing transactions, making Ethereum a deflationary asset that is burned more than it is progressively distributed.
Positive Impact on Markets
While the number of coins in the network is constantly decreasing with the current fee burning mechanism, it is expected to have a positive impact on the price of Ethereum. With ever-decreasing supply and rapidly increasing demand, traders and investors tend to hoard an asset while they wait for a price increase.
This expected effect was actually realized with the 26% growth in October. Immediately after the update, the ETH price increased by more than 20%, but after this increase, there was an average decrease of 30%.
As we prepare this news, Ethereum is trading around $3,500 with 5% daily growth.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.