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Ethereum deflation is picking up speed




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Ethereum, Ether, ETH fees

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Investing.com – Since the London Hardfork (EIP-1559) has been in the spotlight. The way in which transactions are to be paid has changed fundamentally since then.

The number of ethers generated by the miners no longer increases as quickly as before. The reason for this is that part of the fees due is destroyed / incinerated with each transaction.

Ethereum blockchain burns ether with every transaction

The term “burn” is based on the fact that the charges are given in “gas”. In other words, the equivalent of the substance that is burned in the real economy – very simple.

So far, miners have only received a fixed amount (block reward) for their work if they have mined a block and successfully reported it to the blockchain. But now they receive additional transaction fees from the person who commissioned a transaction.

How much a transaction costs depends on the difficulty, the network load and the fluctuating gas price.

Source: TheBlock

With its new transaction fees, the London Hardfork is increasingly causing the number of new Ethereum to shrink continuously. Ultimately, we are even moving towards deflation.

ETH target price is $ 35,000

Many of the analysts believe that ether will continue to rise when supply can no longer keep pace with demand.

The British bank Standard Chartered (LON 🙂 even goes so far as to regard the Ethereum Blockchain as a financial market. In addition to a wide range of services, loans can also be granted and ETH assets can be earned.

The bank’s analysts see a price target of $ 26,000 to $ 35,000 for ETH if the deflationary effects of EIP-1559 persist. Should this rally take place decoupled from the rest of the crypto market, it could even be knocked off its throne.




NFT is the driving force behind the Ethereum dynamic

Last Friday it was the first time that the number of available ethers really shrank. On that day, 13,840 ETH were burned, which is mainly due to the NFT (Non Fungible Token) hype.

The NFT marketplace that has the highest incineration rate is still OpenSea. While ethers were burned on the one hand, the work of the miners only added 13,506 to the blockchain. As a result, the number of tokens shrank by 334 that day.

Source: TheBlock

If the popularity of NFTs continues and continues to grow, there will be a sustained deflationary trend. The Ethereum rate then inevitably moves in the direction of the Standard Chartered target of $ 26,000 to $ 35,000.

From Marco Oehrl

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Hasan Sheikh
Hasan, who loves technology and games, is studying Computer Engineering at Delhi JNU. He has been writing technology news since 2016.
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