Over $45 million in total! Since the London upgrade, over 15,000 ETH has been burned.

Since the London hard fork upgrade on August 5th, EIP-1559 has significantly changed the existing Ethereum transaction fee structure, with its burn mechanism leading to a substantial increase in the price of ETH, reaching a new high in almost two months.

EIP-1559 Token Burning Mechanism

The EIP-1559 proposal aims to change the existing Ethereum transaction fee structure by splitting the fee into a base fee and miner tips, and reducing the circulating supply of ETH by burning a portion of the base fee. As the supply decreases, it could potentially lead to an increase in the price of ETH. Since the upgrade on August 5th, the current price of ETH has risen by about 7%, with a peak increase of nearly 15%.

According to data from Ultrasound.money, over 16,000 ETH has been burned so far. The NFT trading platform OpenSea has burned over 1,880 ETH (worth $5.5 million), ranking first. Following closely is the decentralized exchange Uniswap V2, where transactions have consumed over 1,245 ETH (worth $3.65 million). In third place is the popular Ethereum-based pet battling game Axie Infinity, which has burned over 985 ETH ($2.9 million). Tether USDT built on Ethereum has also burned over 750 ETH ($2.2 million).

Ethereum co-founder Vitalik Buterin mentioned in an interview with Bloomberg that, "EIP-1559 is absolutely the most important part of the London upgrade, proving that the Ethereum ecosystem is capable of making significant changes."

However, while transaction fees are burned, EIP-1559 does not guarantee deflation. This depends on how many new ETH are produced through block rewards. To achieve deflation in the long term, the ETH produced through block rewards must be less than the ETH burned through transaction fees. For example, in the past 24 hours as of August 8th, approximately 15,000 ETH were produced as block rewards, while about 4,000 ETH were burned, resulting in an issuance rate higher than the burn rate.

For the market, prolonged inflation or deflation are both considered unhealthy states; a cycle between inflation and deflation may be more sustainable.