More than $1 million worth of eth has already been burned in less than two hours since the EIP1559 upgrade kicked-in at 2:37 PM euro time.
At 4:24 PM, 401 eth worth $1,114,238 was burned in total according to data by Eth Burned from eth coder David Mihal.
That also says 283.7942854126 eth was burned in the last hour, worth $785,000. So this is moving very quickly with it potentially being the case that about $100 million is burned in a week and a half or ten days.
Just how much is taken out of circulation depends on network usage that determines the level of network fees.
Those fees are currently running at about $5, but that’s for an average transaction that includes things like defi swaps which at one point reached crazy levels like $400 per swap.
At those levels where average fees reach $50 or more with simple transactions being something like $5 or $10, ethereum would be burning some $100 million a day.
In addition it remains to be seen what miners now do as some of them are voting to lower the gas limit instead of increase it.
For holders this means more eth gets burned provided demand for network usage remains the same with miners perhaps fishing for tips.
Their revenue will be reduced by quite a bit, with it now going to holders at the tune of $1 billion or so every quarter by our estimates based on the data so far.
But they still get some 4% of the total supply in block rewards. If price increases proportional to the burned eth, then the miner’s fiat revenue is unchanged to pre-burning.
Some miners suggest maybe the China based ones are asleep, and therefore some of them voting it down is perhaps just because they haven’t yet gotten around to changing the gas limit configuration. All implying they will follow the dev’s recommendation of increasing the gas limit.
But there may be egos, and unlike code, humans can be stupid, so perhaps they’re intending to reduce the gas limit.
In the immediate term, that means holders just get more burned eth as their incentives and those of miners get more aligned. But users have to be born in mind as well as there can be competition, so any play just means the Merger gets speeded up.
We suspect based on a very high level overview which may be mistaken, that the Merger is basically ready to go with the activation decision being more… not ‘political,’ but kind of taking timing into account.
That’s because the Merger is basically a change of the RPC call direction to staker nodes instead of miner nodes, something that on the surface sounds like a two year old can do.
Obviously you need testnets and so on, but at worst if there are any shenanigans we’d get a lot of eth burned and get to be served very well done stake perhaps even as soon as October.
So miners should just follow the recommendations and they may well do once Shanghai gets up. Till then we can enjoy watching this thing fly with 531 eth now burned, worth $1.5 million, as of 4:54 PM.