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Ethereum upgrade after-effects: Network burns around 36 percent of new ETH in 2 days

Ethereum

TL;DR Breakdown

  • While people are patiently awaiting the arrival of ETH 2.0, the London hardfork has been implemented.
  • The implementation of EIP-1559 seems to have created some issues.
  • The network has already burned 5000 ETH or 46 percent of current supply, raising concerns.

Ethereum investors are known to constantly ponder over the moment when the biggest altcoin will replace Bitcoin as the world’s biggest cryptocurrency while antagonists complain about the high traffic and gas prices. However, the newest issue has come as an after-effect of the implementation of EIP-1559.

EIP-1559 or Ethereum Improvement Proposal 1559 activation and implementation was followed by something that no ETH investor had expected. About 14 million USD worth of newly issued Ether tokens which amount to about 5,000 coins, has been burned in the course of only two days.

Ethereum upgrade to be blamed?

The London hardfork that introduced the EIP-1559 changed the network completely and raised the gas prices for completing any transaction on the network by a slight amount. The gas price increased from 0.003 ETH to 0.005 ETH, which is a minor yet, significant amount.

Although on the surface, the upgrade seems to be working perfectly well, burning fees and pricing block space on Ethereum dynamically. But, when an investor looks into the technicalities, things seem to be different.

Misalignment of incentives?

Popular Ethereum user who goes by the name “Face Shaver” considers this upgrade implemented in the network as a “misalignment of incentives.”

The problems arise for an average user when in the long run, this situation would lead to issues in predicting the gas price of the network. After hindering the predictability of the gas price, the situation might worsen with the onset of disturbance in the stability of the network.

According to the analysis revealed by the firm Dune Analytics, there is about 90 percent of transactions have yet to gain from the implementation of the upgrade.

John Lincoln

John Lincoln

Lincoln contributes blockchain and crypto perspectives that meet the industry's selective information needs in a timely, undiluted fashion. His greatest wish is to share transformational technology through an engaging and easy-to-read style, making complex topics accessible to all.

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