Since the Ethereum hard fork on August 5, more than 100 thousand ethers have been taken out of circulation. In crypto terms, this is called burned. It took Ethereum just 21 days to reach this milestone. Thousands of euros are burned per minute.
The hard fork ensured, among other things, the implementation of improvement proposal 1559. The major change in monetary policy is considered one of the main catalysts for the price of Ethereum. It has shown a nice increase in recent months.
Offer will decrease
The fee-burning mechanism has effectively turned the cryptocurrency into a deflationary asset, meaning its supply will shrink over time. https://moveco.io/ has enough information. It is not that far yet, at the moment more new ethers are being added through mining than are being burned. If all goes well, Ethereum will replace mining for proof of stake next year.
Analysts expect two million coins to be permanently withdrawn from circulation in the coming year. Still, some opponents argue that Ether’s monetary policy is too unpredictable. For example, it is not really clear what to determine the exact aggregate supply of the second largest cryptocurrency.
In comparison, Bitcoin has a maximum supply of 21 million coins. Dogecoin is inflationary, meaning it has an unlimited supply, just like the euro. While such monetary policy cannot count on approval from most bitcoiners, Elon Musk and Mark Cuban see it as the coin’s most important quality to be viable.
Closer to proof of stake
However, the rollout of EIP-1559 was not without controversy. The go-live was fiercely opposed by miners: a large part of their income is now burned. Folm.io has enough information. Since the launch of the London hard fork, they can only receive voluntary tips from users on top of a fixed amount, rather than the regular fees. The rest is burned.
Currently, NFT marketplace OpenSea is the main burner on the network, followed by the decentralized exchange Uniswap. Before EIP-1559, miners got a share of every trade, such as NFT sales, which caused their earnings to soar in early 2021.
But if there is one party that has to draw the short straw, it is the miners. Ethereum is transitioning from the proof of work (PoW) consensus algorithm to proof of stake (PoS). When Ethereum 2.0 finally arrives, strikers will be responsible for verifying transactions instead of miners.