ETH Fees Renews its Uptrend and Back at May Levels, Making Ethereum Effectively Deflationary
So far, more than 50k ETH worth about $160 million has been burned, which is flipping Ethereum issuance to negative in more and more blocks.
The market has started to get back into action with Bitcoin above $47k, Ether $3,285, and the total market cap $2.1 trillion.
With this, the fees on the second-largest network have started to spike as well, currently, around $20, last seen on May 23rd, according to Blockchair. Average gas price has also jumped to 62.55 gwei, which increases further when using other applications like DeFi protocols, during high periods of activity, congestion, and if one needs their transactions to be processed fast.
This surge in gas fees has resulted in more amount of ETH getting burned, leading to the flipping of Ethereum issuance to negative. About 100-150 gwei is the breakeven for the Ether issuance.
“Sustained base fee needed to fully offset issuance in Ethereum. Today: 167 gwei. After The Merge: 19 gwei. After capacity increase: even less,” noted yearn developer Banteg.
So far, since August 5th, when the London upgrade with EIP-1559 was activated, more than 50k ETH worth roughly $160 million have been burned. The biggest contributor to this burn is the NFT marketplace OpenSea.
The fees on the Ethereum network have actually been gradually increasing since early July, thanks to non-fungible tokens.
Before the greens made their re-entrance in the past month, NFTs have been attracting the mainstream masses to the world of cryptocurrency. Everyone has been hopping on this digital art train, from teenagers, celebrities, artists, and companies from different sectors.
— 🃏Fiskantes (🍄, 🍄) (@Fiskantes) August 15, 2021
OpenSea is also seeing its trading volume rising since the beginning of this month, recording nearly $800 million in August, up from $284.2 million in July and $125.2 million in the previous month. Last month, it raised a $100 million funding round led by A16z, valuing OpenSea at $1.5 billion.
However, in this NFT frenzy, it’s all about attention, with the likes of Pudgy Penguins and CyberKongz now at the forefront and the top collectible projects such as CryptoPunks and Meebits now seeing their sales drop by more than 70% in the last week.
While trading is declining, Christie’s is all set to auction Bored Ape NFTs along with CryptoPunks and Meebits NFTs next month, which can bring them back into the limelight. Rare NFTs are the ones that fetch millions of dollars, and the auction houses tend to sell the rarest ones.
Amidst this, this past weekend, the five-star hotel Ca’ di Dio announced that it is officially opening in Venice on August 27. Before that, through Monday, August 16, the parent company VRetreats is auctioning off a night’s stay, but consumers must bid on an NFT.
“We see using NFT for this auction as an advantage from a distribution point of view, not just from a marketing point of view,” said Angelo La Riccia, commercial director of VRetreats and VOIhotels.
“I’ve heard from colleagues in the hospitality industry that work at other brands who say they’re putting in a couple of euros to bid in the auction just to understand how that works,” La Riccia said. “Hoteliers have to think creatively as we come out of the crisis.”