Over 2 Million ETH (Worth $6 Billion) Burned Since EIP-1559 Launch
Ethereum network has destroyed over 2 million ETH – nearly $6 billion – were removed from circulation forever.
Through the EIP-1559 update that was deployed last year, Ethereum has formally burnt more than two million ETH.
The major NFT marketplace OpenSea, followed by ETH transfers, is the largest on-chain gas consumer on the Ethereum network. The likes of Uniswap, Strong Block, Tether, etc. are further gas-guzzlers.
Burned Ethereum and the ‘Consensus Layer’
Ethereum is moving toward its biggest update ever in addition to the London Hard Fork.
According to Lubin, Ethereum 2.0, which has just been renamed “Consensus Layer,” would increase the network’s transaction speed, reduce costs, and “will lay to rest Ethereum’s carbon or energy footprint concern.”
With the update, Ethereum will switch to a separate consensus model called proof-of-stake from the proof-of-work (POW) consensus process that Bitcoin also employs to confirm transactions (PoS). The latter approach uses less computational resources to accomplish equivalent levels of protection, making it more ecologically friendly.
And that’s not all.
In order to motivate those with substantial infrastructure to lend their resources and validate transactions on the network, proof-of-work requires a significant amount of ether [the word used to define Ethereum the cryptocurrency rather than the network] issuance, according to Lubin. Therefore, if your infrastructure is really little, you may issue a lot less ether for each built-up block.
Less issuance translates into less Ethereum being released onto the market.
Because of this and the current burn process, according to Lubin, Ethereum will “be burning more ether every single day than is issued, because far less ether will be issued to protect the network.” Therefore, ultra-sound money is going to be created.
According to the co-founder of Ethereum, all of these modifications are expected to go live “by Q2 or perhaps dipping into Q3”.
The switch by Ethereum to a proof-of-stake (PoS) network has been in the works for many years. On the Kiln test net, the network merged last week. It is anticipated that this will be the penultimate test net prior to the eventual change in the consensus method, and the “merge” is scheduled to take place here sometime in the second quarter of this year.
After the “merge,” the present POW consensus system will be completely phased out, and only PoS will be used to create new blocks on the block chain. This action would assist Ethereum in separating itself from Bitcoin’s environmental debate.
According to the most recent statistics, stakers have locked up more than 10 million ETH on the Ethereum 2.0 deposit contract, which was worth at more than $29 billion at the time of writing. The market’s supply of openly traded ETH is reduced by locked ether by removing it from circulation.
The reduction in ETH issuance per block after the merging is live would put additional pressure on supply. Although the deflationary nature of Ethereum did not have a significant impact on the price, many analysts think that the merger will be a significant catalyst.