Ethereum burns 1 million tokens since London hard fork update

Ethereum burns 1 million tokens since London hard fork update
Photo Credit: Pixabay
26 Nov, 2021

Ether, the cryptocurrency token of the Ethereum blockchain platform, has seen 1 million tokens burned since the introduction of the Ethereum Improvement Proposal (EIP) 1559. Known more popularly as the first part of the Ethereum London hard fork, the update introduced a feature called the Ethereum transaction fee burning. Now, statistics backed up by various crypto trackers state that over 1 million Ether have been burned since the London hard fork. 

Coin burning, or token burning of a cryptocurrency, occurs when a token is permanently taken out of circulation. The EIP 1559 update to the Ethereum blockchain is designed to add a deflationary aspect to Ether, where the network can burn coins to reduce the number of tokens in circulation, at a given time. If demand remains constant, this can potentially lead to higher prices and increasing purchasing power of Ether. 

Ether’s EIP 1559 update is also designed to reduce the transaction fee on the Ethereum blockchain, alongside improving transaction times. By adding Ethereum transaction fee burn, the volatility of the transaction fee that was previously prevalent on the blockchain is expected to be stabilised. 

In an interaction with Mint, Toshendra Sharma, founder of Indian NFT (non-fungible token) marketplace NFTically had said that the update is good news for developers in the cryptocurrency space in India, who typically enter the industry through Ethereum. Other experts had echoed these sentiments, with Anuj Kodam, founder of Wall.app, stating that the update could result in transaction fees becoming about one-tenth of before. However, they also alerted that this process may take some time. 

The 1 million Ether burned milestone hints that transactions are indeed pushing coins out of circulation as transactions increase on Ethereum, and miners do not continue to add an indefinite number of coins to the blockchain. 

A Cointelegraph report states that play to earn NFT game, Axie Infinity, which is incidentally a notable metaverse project to watch out for in 2022, is a major destination for Ether burn – alongside popular NFT marketplace OpenSea.io. Going forward, it will be interesting to see how the Ethereum token burn affects the potential market price of the token – which can affect how investors look at it.