Around 2.3 ETH approximately are being burnt every minute via the new transaction fee mechanism introduced in Ethereum’ London upgrade on 5th August.
The highly anticipated London hard fork went live earlier on 4th August earlier this week, with the introduction of the EIP-1559 upgrade that adjusted gas fees. A part of that adjustment introduced a mechanism that burns a number of the base fees collected.
The total amount of ETH burnt since the upgrade went live around 14 hours ago is roughly 3,395 ETH consistent with the several counters available. Etherchain reports a mean burn rate of 2.36 ETH per minute. This equates to $6,596 USD per minute, or around $395,000 USD of ETH rising in metaphorical smoke every hour at the present prices.
An alternative counter called Ultrasound.money reports a complete burn of 3,390 ETH worth a whopping $9.5 Mln at the present ETH price of around $2,800 USD. The tracker reports that the favored NFT marketplace OpenSea is among the top ETH burner with 374 ETH, or simply over $1 million dollars, destroyed since the upgrade was launched.
In second place was Uniswap’s version 2 that had burned 263 Ethereum, or $740k, at the time of reporting. Uniswap founder, Hayden Adams, commented on the burn rate stating that if things continue at the same rate, the protocol could burn the max amount as 350k ETH, or almost $1 Bln per annum.
The Bankless DeFi newsletter threw around some figures in an effort to predict the impact on future supply. Since the bottom fee is anywhere between 25% and 75% of the entire transaction fee, manual calculation and predictions are difficult.
It modeled burn rates within this range using data on fees generated in 2021 and outlined:
“Annualizing these figures, this suggests that between 800k – 2.4 Mln ETH is projected to be burned in 2021.”
When combined with the reduction in block reward issuance from the merge to PoS [Proof-of-Stake], the fee burning could lead to Ethereum having a deflationary supply, which might see it fulfill the increasingly used meme of “ultrasound money”.