Deflationary blocks appear when the amount of ETH burned exceeds the mining reward. A few days after the launch of the London hard fork, the transaction fee saw an increase for a short time.
An increase in transaction burn rate led the Ethereum supply to go deflationary for around two hours. Due to the heavy load on the network in recent days, much more gas has burned.
The ETH Burn Bot recently recorded a case where 545 ETH burned in one hour. For that reason, the crypto asset saw a deflation of -13 ETH during that short period.
A few hours later, the ETH Burn Bot detected further deflation in which 945 tokens burned in an hour. That resulted in a negative issuance of -417 ETH.
When the ETH burned exceeds the mining reward, deflationary blocks emerge, and supply temporarily decreases. According to the tracker of advisory company Carbono, there are currently 791 new deflationary blocks.
The Hard Fork London Is Making Its Mark
The implementation of the London hard fork on August 5th introduced the long-awaited EIP-1559 update. That allowed adjusting the transaction fee calculation system, which seeks to enable the Ethereum improvement proposal.
The network has faced multiple problems ranging from gas rates to escalation in the past. However, that would help alleviate some of the pressure on the blockchain. Although EIP-1559 will not reduce transaction fees per se, it will make them more predictable. Besides, it could lead to reduced costs for users.
The long-awaited London hard fork is already making its mark. Within days of its launch, the community saw an increase in the transaction fee of the network. Although that only lasted a couple of hours, the rate-burning rate has created a deflationary supply.
According to the website ultrasound.money, 36,154 ETH have burned so far. That amount is equivalent to around USD 80 million in just under a week.
Some Expert Opinions on EIP-1559
Canadian investor Kevin O’Leary, also known as Mr. Wonderful, considers EIP-1559 to have been the best of Ethereum.
Mark Cuban predicted that EIP-1559 would change everything. He highlighted that what happens will impact how people perceive Ether as a store of value.
Former Zcash CEO Josh Cincinnati said that he thinks EIP-1559 is very good. However, he stated that anyone who predicts the supply of ETH thanks to EIP-1559 will always be wrong.
Van Ness thinks the EIP-1559 would make the network more secure, a point most analysts seem to miss. He specified that that implementation helps fight denial-of-service (DOS) attacks in the long term.
Ether is trading at around USD 3,120 and has grown by 10.6% in the last week, according to CoinGecko. That way, it shows signs that its price is in an upward trend.
Although this is a big rally for Ethereum, some analysts are skeptical about a massive bullish run. Of course, that does not mean that ETH will not see its price steadily increase in the long run.
By Alexander Salazar
