The theoretical deflation caused by the London upgrade at Ethereum last week actually became visible on the blockchain for a short time. Almost 800 “deflationary blocs” were created.
A spike in the burn rate of Ethereum transaction fees has caused the offering to be deflationary for at least two hours. The network has been heavily used in the last few days. As a result, a lot more gas was burned.
From 10:00 p.m. UTC, the ETH Burn Bot briefly recorded a burn rate of 545 ethers (ETH) per hour. With 532 ETH per hour being spent, the asset had a deflation of -13 ETH for that short period of time.
A few hours later, the ETH Burn Bot recorded a major deflationary burn, burning 945 tokens within an hour. This temporarily resulted in a negative output of -417 ETH. From this, an annualized deflation rate of -3.12 percent was calculated.
945.1184 $ ETH burned last hour.
Issuance: 528.0000 ETH
Net Change: -417.1184 ETH
2021-08-10 22: 00-23: 00 UTC
Last block: 13000300
Cumulative: 24,942.1282 ETH
– ETH Burn Bot (@ethburnbot) August 10, 2021
If the amount of ETH burned exceeds the mining reward, deflationary blocks will be produced and the supply will temporarily decrease. That was observed on a tracker from consultancy Carbono, which has recorded 791 deflationary blocks to date. These are defined as blocks where the fee burned exceeded the number of ETH mined.
When the London Hard Fork was implemented on Thursday, it introduced the highly anticipated Ethereum Improvement Proposal 1559. This improvement suggestion should adapt the transaction fee calculation. As part of this adjustment, mechanisms were introduced that burn off part of the base charges.
According to ultrasound.money, which tracks the coins burned, 25,600 ETH had been burned by the editorial deadline. At the current rates, that equates to around 80 million US dollars in just under a week.
The Ethereum economy is not expected to experience sustained deflation. That won’t be the case until fee burning is combined with reducing block rewards spending. And with that, the transition to proof-of-stake will be complete.
In this context: Ethereum network burns 395,000 ETH per hour after London upgrade
For Ethereum users, however, the news is not all good as gas prices have risen again. According to BitInfoCharts, the average transaction price rose from around $ 4 to $ 20 at the end of July. Etherscan’s gas tracker recorded a price of up to $ 28.60 for a token swap on Uniswap.
The surge in demand for Ethereum block spaces has been fueled by non-fungible tokens. The OpenSea marketplace, Gala Games’ Vox and Axie Infinity are among the top 4 when it comes to gas combustion. A total of 2,200 ETH or $ 7 million has been burned so far.