“Coin/token burning is the process of permanently removing the circulating coin/token from the total supply. It’s a fairly common action in the crypto world. The main purpose of burning coins/tokens is to increase the unit price by providing the supply balance. If the supply-demand balance is achieved in the market, a stable price increase occurs. A competitive environment is created with other coins whose supply is limited. On the other hand, the transaction speed increases, the security increases and the network structure are relaxed.”
With the Berlin Hard Fork completed successfully and with the planned creation of 12,965,000 blocks, the next update for the Ethereum 2.0 transition, the London Hard Fork, is officially done. There are many reasons why this update is quite important.
5 code updates have been made. One among these code updates is so important that it overshadows the others. With the update called EIP-1559, changes have been made to Ethereum transaction fees. ETH started to be burned with EIP-1559.
Ethereum Developer Disclosures
Conner, who took an active role in the development of Ethereum 2.0, made a statement on Twitter; He made a statement about “They will burn a high amount of ETH” when the code named EIP-1559 is put into operation. He added that with a large amount of ETH burned, the supply of new ETH will be drawn to regions very close to zero, adding that the transition will be quite safe. It was reported that 30 thousand ETH was burned at the time of the update.
100 Million Dollars of ETH Burned
The EIP-1559 was basically designed as a transaction fee (commission) burning mechanism. It has been actively used since August 5th and caused the burning of more than $100 Million worth of ETH in total. In the transactions made, 1/3 of the total amount of ETH is burned in order for the transaction to take place. The meaning of being burned; is the removal of the supply of Ethereum from circulation. You can visit Watch The Burn to follow the Ethereum burning instantly.
As we have stated since the London Hard Fork, there is an ETH burning exceeding $100 Million. Approximately 2.3 ETH is burned per minute. However, the annual supply of Ethereum is expected to shrink by 4%. It is aimed that the contraction will increase by the percentage each year. With the contraction, as the amount of Ethereum circulating in the market decreases, the prices are expected to increase.
Ethereum Market and Other Cryptocurrencies
Since August 5, Ethereum prices have increased. This increase also affected other cryptocurrencies, and in general, unit prices on cryptocurrency trading platforms rose. The increase in prices due to the supply of Ethereum is considered among investors that ETH could be the new Bitcoin.
The burning process continues. Accordingly, the amount of ETH in the total supply is decreasing day by day. Ethereum price had reached around $3300 with the update from $2500. Ethereum 2.0 developers draw attention to the year 2022, and they believe that the usage area will increase with Ethereum 2.0 and people will start using Ethereum technology. We will see together what will change in the crypto world with Ethereum 2.0.
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