More Ethereum has been burned than has been minted in the last 24 hours

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  • EIP-1559 was a code change that allowed transaction fees to be burned.
  • This put deflationary pressure on Ethereum.
  • pressure has helped drive the price of ETH up.

When EIP-1559 was introduced for Ethereum last month, it should have slowed the growth rate of ETH supply. But in the last 24 hours, the amount of ETH has not increased at all. It is shrinking.

More Ethereum has been burned on the network than was minted in the last 24 hours, which means there is less ETH available today than yesterday. Ethereum experts believe that this is a first for the network.

EIP-1559 was a proposed encoding change for the Ethereum blockchain which allowed block sizes to be expanded so that more transactions could be sent over the network. Ethereum network has battled congestion thanks to the popularity of NFTs and decentralized financial applications such as the lending protocol. Aave and Uniswap exchange, as these tools use limited network resources.

Part of the proposal was to impose a base fee for each transaction. Instead of going to miners who validate network transactions, as had been done with fees, that base fee would have been burned (i.e. taken out of circulation by sending it to a wallet that cannot be accessed). idea was to reduce the supply of ETH, which, unlike Bitcoin, has no limits on the upside. As a result, the price of Ethereum would theoretically increase to meet demand.

Although EIP-1559 reduces the rate at which the supply of ETH grows, it does not necessarily reduce the supply of Ether. This is because, with each block produced, the miners continue to hold onto the newly mined Ether. As long as it is higher than the commissions burned, the supply of ETH increases.

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This is no longer the case, at least today.

Over a 24-hour period, Thursday through Friday, supply growth turned negative. More ETH was burned than the 12,500-13,000 ETH issued to miners. This can happen as the base rate adjusts up during times of increased demand.

DeFi Pulse co-founder Scott Lewis and Week in Ethereum News founder Evan Van Ness believe this is the first time Ethereum has gone deflationary.

I should be clear that this is “the back of the math envelope” and I did not “check @trueblocks for more than 24 hours” to be 100% sure

4.5 blocks per minute * 2.1 eth per block = 9.45 ETH issued per minute and we are at 9.6 ETH burned per minute right now

– Evan Van Ness (@evan_van_ness) September 3, 2021

Since the code change took effect on August 5, more than 188,000 ETH have been burned, according to the EIP-1559 monitoring website. Ultrasound money. For Nomics prices, it is the equivalent of $ 736 million.

In fact, the change has driven an increase in the prices of the currency. Ethereum went from a price of $ 2,516 on August 4 to $ 3,926, an increase of 56%.

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