Thousands of Ethers (CRYPTO: ETH) will be burned, destroyed forever, daily starting tomorrow, following the implementation of the Ethereum improvement proposal. The EIP-1559 is a part of the London network software upgrade, known as a hard fork.
What Happened: The implementation of the upgrade is scheduled for Aug 5, at 2:05 CEST.
EIP-1559 is expected to burn most of Ethereum’s transaction fees in the future, significantly decreasing the coin’s inflation, currently standing at about 4%.
In July, 93,870 ETH, which is nearly $233 million as of press time), were paid as transaction fees on the network.
Meanwhile, in June, nearly 72,000 ETH, which currently accounts for about $179 million, significantly down from May’s nearly 310,000 ETH, now equivalent to $768 million.
Lately, the number of Ethers spent on transaction fees each day ranges between 6,500 ETH and 1,500 ETH.
Starting tomorrow, most of those coins will be burned forever, while the fees are expected to decrease.
EIP-1559 is scheduled to go live this week and I still see a lot of wrong takes on its impact. Remember:
— korpi (@korpi87) August 2, 2021
Fees paid for transactions will be divided between a “base fee” and an optional “miner tip;” the first one will be burned, and the second one will be paid to the miners processing transactions.
According to recent reports, Co-Founder of investment firm Multicoin Capital, Kyle Samani, recently described the upgrade as “one of the most interesting and important upgrades in the history of Ethereum,” pointing out that it will reduce the coin’s supply, which will lead to higher prices.
The Base Fees are expected to account for somewhere between 25% to 75% of the gas fees currently paid to miners, according to Ethereum core developers coordinator Tim Beiko.
Based on July’s data, that would have resulted in anywhere from 23,467 ETH to 70,402 ETH being burned (currently between $58 million and $175 million.)
Price Action: According to CoinMarketCap data, Ethereum is currently trading at $2,688, gaining 7.83% of its value over the last 24 hours.
The current price is down 42.3% from mid-May’s high of nearly $4,300, but 43.3% higher than late July’s low of $1,730.