Ethereum sees deflationary issues for the first week in a row

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The Ethereum network saw its first straight week of negative offers as bubbling markets persistently generate high transaction fees.

With the highly anticipated London upgrade, which introduced a burn mechanism into Ethereum’s fee market in early August, a small amount of Ether (ETH) has been destroyed with every transaction carried out on the network since then.

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With gas prices persistently high, Ethereum has seen seven consecutive days of deflationary emissions for the network, meaning more ETH has been taken off the shelf than has been created by mining. In order for Ethereum to be able to consistently produce deflationary blocks, gas prices must remain constant at around 150 gwei.

EthHub co-founder Anthony Sassano commented that a deflationary Ethereum was not expected until the “merger” – when the Ethereum blockchain is to merge with the Beacon chain of Ethereum 2.0, which is currently expected for the first half of 2022.

According to the Ultrasound.Money fee burner tracker, around 15,000 ETH (65 million US dollars at current prices) are burned every day. Taking into account the rate of creation of new ETH, Watch the Burn reports a net weekly spending of minus 8,034 ETH (around 34 million US dollars) at the time of writing.

Since the London upgrade, more than 724,400 ETH worth $ 3.1 billion have been permanently destroyed.

The average cost of an ERC-20 token transfer is now a painful $ 46, according to Etherscan. Something more complex like providing liquidity for a decentralized financial protocol or a token swap on Uniswap can cost up to $ 140 right now.

Sassano emphasized that the upgrade did not increase gas prices but made them more predictable. “Contrary to popular belief, EIP-1559 didn’t raise gas prices and actually helped significantly during spikes in demand (like spiked NFT coins), resulting in an overall smoother network,” he said.

According to the Bankless Ethereum Q3 network report, the transaction value processed from July through September of this year was a whopping $ 536.5 billion, an increase of nearly 400% over the same period last year.

Related: The Ethereum supply slips into deflation for a moment as gas fees rise

Despite Ethereum’s first deflationary week, many Ether proponents are trying to encourage users to migrate to transaction via the nascent Layer Two ecosystem.

According to L2beat, there is a record $ 4.68 billion in Total Value Locked (TVL) in the various Layer 2 networks. This TVL has increased nearly 500% in the past two months as Ethereum users increasingly look for ways to avoid those agonizing transaction fees.