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Deflationary policy shows the first negative signs

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Ethereum network
ETH network. Source: Shutterstock, Visual Generation

ETH has survived since the start of the protocol EIP-1559 a great period that was sealed a new historical high a few days ago. Today was burned by $ 12 million in ETH more than the minerals could extract.

ETH and deflation

The process of burning ETH tokens is in full swing. Initially, the positive process is beginning to show some negative pitfalls deflationary policy. High network load produces unbearable charges. According to the burn tracker portal, $ 12 million more has been burned at ETH today than was distributed.

How to explain it? Simply put, after running the EIP-1559 protocol, all of them transaction fees in the network will burn instead of going to the miner’s wallets. And it is this factor that can overwhelm the network, which will extremely increase transaction fees and burn a huge amount of coins.

ETH combustion process statistics

ETH combustion process statistics. Source: WatchTheBurn

Yestrday’s summary: it was burned 16 228 ETH which is approximately $ 66 million. However, only $ 54 million was distributed. So the miners received a reward 2 495 ETH. In essence, we are witnessing a transaction auction that is causing a significant increase in fees.

To date, the value of all ETH coins burned is at $ 2 billion. However, the spot price of ETH has risen sharply, so the same number of burnt coins is about 35% higher. At the time of writing, ETH was $ 4,361.

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All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.

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