Ethereum supply briefly turns into deflation as gas rates skyrocket. In fact, rising gas rates and ETH consumption rates so far have produced nearly 800 deflationary blocks.
Specifically, an increase in the Ethereum transaction burn rate has resulted in at least two hours of supply being deflationary. The network has been under heavy load in recent days, causing much more gas to be burned.
Ethereum supply briefly turns to deflation
By the way, a few hours ago the “ETH Burn Bot” recorded a case where 545 ETH were burned in a period of one hour. Which resulted in the asset seeing a deflation of minus 13 ETH during that short period.
Then a few hours later the ETH Burn Bot spotted a bigger deflation. In which 945 tokens were burned in one hour. Which resulted in a negative issuance of -417 ETH.
We could say that when the amount of ETH burned is greater than the mining reward, deflationary blocks are produced and the supply temporarily decreases.
In this regard, the tracker of the advisory company Carbon, reports that currently there have been 791 deflationary blocks.
Hard Fork London
When the Hard Fork London rolled out on August 5, it introduced the long-awaited EIP-1559 update. That adjusted the transaction fee calculation system. It aims to enable the Ethereum improvement proposal that will bring significant changes.
In particular, the network has faced multiple problems, from gas tariffs to escalation in the past, but this would help alleviate some pressure on the network. While EIP-1559 will not exactly reduce transaction costs. If it will make the cost of a transaction more predictable and possibly result in reduced costs for users.
Specifically, the long-awaited Hard Fork London is already making its mark. Just days after its launch, the community is witnessing an increase in the network’s transaction fee. However, this only lasted a couple of hours. Even so, the rate of tariff burning has led to a deflationary supply.
According to ultrasound.money, at the time of writing 27,543 ETH have been burned. At current prices, this works out to about $ 80 million in just under a week.
In this regard, Canadian investor Kevin O’Leary, also known as “Mr. Wonderful ”, considers the EIP-1559 to be the best of Ethereum so far.
Likewise, Mark Cuban said: «Obviously, with EIP-1559, everything changes. What happens in the future is going to really impact how people specifically perceive it as a store of value.».
Similarly, former Zcash CEO Josh Cincinnati stated: “I think EIP-1559 is pretty good, but anyone who makes predictions about ETH supply thanks to EIP-1559 will be wrong, either way.».
As for the ETH price, it is currently showing bullish signals. Trading above $ 3,200. This is recorded by our internal Crypto Online tool.
In closing, while this is a huge rally for Ethereum, though some analysts are still skeptical of a massive bull run. By the way, this is not to say that ETH will not see a massive bull run, what do you think about it? Let us know in the comment box.
I close with this phrase by Perry Kaufman: «If you do not execute all the signals of the trading system, do not expect to get the results of the system.».