After the highly-anticipated London upgrade introduced a token burn mechanism on Ethereum (ETH), the network is already burning 3.68 ETH ($10,295) every minute on average.
Among other enhancements, the Ethereum Improvement Proposal (EIP) 1559 made it so a portion of all transaction fees, called the base fee, is now destroyed in each block—instead of going to miners.
According to the proposal’s description, this was done to counterbalance Ethereum inflation while still giving the block reward and priority fee (the maximum fee users are willing to spend to include their transaction in a block) to miners.
At the time of writing, roughly 3.7 ETH, just over $10,000 at current prices) are being burned on Ethereum every minute, according to Etherchain.org. Meanwhile, 630 ETH (around $1.77 million) were burned just hours after the London upgrade was deployed. The base fee has fluctuated between 70 Gwei ($5.84) and 100 Gwei ($8.34) over the past hour.
Currently, popular non-fungible token (NFT) marketplace OpenSea is the largest “ETH burner” as over 69 ETH ($193,124) tokens were destroyed thanks to transactions it facilitated since the upgrade, Ultrasound.money’s data shows.
OpenSea is followed by two iterations of decentralized finance (DeFi) trading protocol Uniswap—Uniswap V2 (53.33 ETH) and Uniswap V3 (45.25).
So far, experts and community members alike are demonstrating positive sentiment toward the London upgrade.
“The much anticipated EIP1559 network upgrade was a huge day for the Ethereum cryptocurrency ecosystem. Now, every transaction, NFT purchase or loan on the Ethereum network will result in ETH being burned out of existence, making ETH a deflationary and inflation-busting asset,” noted Ross Middleton, chief financial officer at decentralized crypto exchange DeversiFi, in an email exchange with Decrypt.
Middleton compared the new ETH burning mechanism to traditional stocks, explaining that it is an equivalent of “Apple Inc burning AAPL shares every time someone bought something from the Apple App store or made an in-app purchase.”
The price of ETH itself, however, wasn’t affected by too much so far. According to crypto metrics platform CoinGecko, the token is trading at around $2,800, up 4.9% in the past 24 hours.