The Ethereum (ETH) transaction fee-burning mechanism removed 1.3 million ETH from the network's circulation in 2021. A “self-destruct” mechanism that permanently removes a rate of ETH-based fees is a “fee burn.” Miners are paid as a reward on their Proof of Work protocol when they confirm transactions on the Ethereum blockchain.
The fee burning began in August 2021 as a key to start the first stage into upgrading the Ethereum network to a more proficient "Proof of Stake" agreement model after activating EIP-1559. The burn function is an intentional attempt to reduce the overall supply of Ethereum in circulation to make this particular currency more valuable, using the basic principles of supply and demand.
While deploying every transaction on the Ethereum network in the first phase of the EIP-1559, a segment of the ETH fees is taken out of circulation. Although sending and receiving ETH does not usually cost too much in transaction fees, aka gas fees, the time-consuming and high-bandwidth duties such as stamping NFTs have much higher gas fees.
Ethereum, which burned over $11 billion last month, included a transactional gas fee, meaning there were a lot of transactions, and the vast majority of them were done on OpenSea. Top-ranked NFTs marketplace OpenSea is setting the pace, burning 67,471 ETH with a worth of more than $182.6 million in the U.S.
Because OpenSea set a record of NFT sales, outperforming $5 billion in income the previous month, it burned more than $182 million in Ethereum in January! Those January deals ruin the previous single-monthly record for OpenSea of $3.4 billion set last August.
Presently, Ethereum is still an inflationary blockchain as its current issuance of new coins is 5.4 million ETH per year, which is more than its yearly burned sum of 3.5 million coins. In any case, that will transform once Ethereum's movement to its "Proof of Stake" agreement model is finalised by the Q3 delivery date of this year.
All in all, the total number of newly generated ETHs will be fewer than the total amount of token burns, resulting in a net ETH deflationary network. The ‘merge’, aka the PoS shift, will occur in the second or third quarter of this year. However, the network’s overall hash rate managed to set a new all-time high before that. At Cryptologi.st, you can read hot news of trending cryptocurrencies such as ETH, BTC, etc., and learn all you need to master the crypto world!
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