Recent estimates show that as much as 1.83 million Ethereum (CRYPTO: ETH) will be burned, in other words, destroyed forever, following the implementation of Ethereum improvement proposal (EIP) 1559 through the London hard fork, which resulted in an ongoing burn of thousands of Ether each day.
What Happened: A Monday post on Chinese social media platform Weibo cites the recent remarks by Ethereum core developers coordinator Tim Beiko, who expects that anywhere from 25% to 75% of Ethereum’s fees will end up being burned.
Actual data confirmed this estimate, with 66.85% of the fees being burned on an ongoing basis.
While this percentage will end up fluctuating — even significantly, especially at times of high network strain — the post’s author suggests that the average value will exceed 50%.
It doesn’t lower gas fees in the long run because it’s not a scalability improvement. However, it may help users not overpay for transactions due to a better fee estimation process. It also smooths out gas prices between blocks thanks to variable block sizes. pic.twitter.com/HJcLMU1tYY
— korpi (@korpi87) August 2, 2021
The reason behind it is the fact that the percentage of the fees burned tends to be really high, except for when the network sees abnormally high activity, which usually happens only for a short time.
Using those averages as constants, Weibo user estimates that if the burning had started when the Ethereum network first launched in August 2015, we would have seen close to 4 million ETH destroyed.
The network used to see much fewer fees in its early stages and only saw sustained high transaction volume with the recent introduction of decentralized finance (DeFi) protocols on its blockchain besides the much more short-lived 2017 initial coin offering craze.
As a result of the DeFi ecosystem’s birth, Ethereum fee volume skyrocketed in the second half of 2020, and since May 9, over 1,000 Ether has been paid for fees every single day, according to Glassnode data.
The total number spent on the network since the beginning of the “DeFi summer” is purportedly about 3.334 million Ether.
Based on this on-chain data, the user estimates 1.83 million ETH to be burned during the upcoming year.
Price Action: According to CoinMarketCap data, Ether is trading at $3,123 as of press time — down 0.38% over the last 24 hours.