Ethereum Officially Becomes ‘Deflationary’ as More ETH Burned than Issued; NFTs Continue to Feed the Frenzy
As of publication, more than a whopping 4,840 ETH worth about $13.4 million has been burned in just over 24 hours since the EIP-1559 activation.
Trading above $2,700, Ether is enjoying a sharp rebound in its price for the last 17 days.
On Thursday, the price of Ether rallied as far as $2,840 and hit resistance just above 0.073 against BTC. BTC 2.69% Bitcoin / USD BTCUSD $ 30,101.10
$809.722.69% Volume 20.53 b Change $809.72 Open $30,101.10 Circulating 19.05 m Market Cap 573.32 b 4 mon SEC Commissioner says NFTs Might Fall Within Their Jurisdiction, Gensler Hires Senate Aid for Crypto Policy 4 mon A Possible Crypto Recovery Moving Into New Year, Risk-on Sentiments Send The Stock Market to Another Record High 4 mon Bitcoin and Ether Dump More Going Into Year-End, ETH Killers Showing Great Momentum
In USD terms, Ether is still about 36.5% away from its mid-May peak and about 17.7% down from 0.823 BTC high.
Amidst this price action, the U.S. furniture maker and retailer Ethan Allen Interiors announced that it is changing its stock ticker to “ETD” after 28 years to avoid confusion with the crypto asset Ether, both bearing the same ticker “ETH.”
Earlier this year, Ethan Allen’s stock prices soared as traders confused its ticker for the symbol for ether.
ETH Getting Burned
The latest rally in the price of Ether came in anticipation of the London hard fork, which was to activate EIP 1559. Now, the Ethereum network has officially started burning the base fee paid in ETH.
Already, as of writing, more than a whopping 4,840 ETH worth about $12.7 million has been burned by the second-largest network in just over 24 hours since the activation.
Interestingly, the more Ethereum is used, the more the fees increase, as we have always seen, and the more the ETH gets burned.
Interestingly, at one point, in block 12,965,263, there were more burnt ETH than issued, making it the first deflationary block in history.
— Jason Choi (@mrjasonchoi) August 5, 2021
But the change is seeing people paying more in fees than they have to. “Many people overpaying for txns right now. Please be a bit watchful. If you transact now with the old format, your gas price is converted to basefee + tip. So the basefee is paid first, and then the rest goes to the miner as a tip, even if a smaller tip would also suffice,” said researcher Hasu.
Users are recommended to look up the recent basefee and set your gasPrice as basefee to which 1-2 gwei can be added as a tip.
Another 1 gwei priority fee txn sent and mined in ~1 minute. Set my maxFee to 323, and only paid 100 (99 base fee + 1 gwei tip) 😁
I think gas price oracles are probably overestimating how high the priority fee needs to be now. Worth manually changing! https://t.co/eHH4WaGzoK
— Tim Beiko | timbeiko.eth ☀️ (@TimBeiko) August 5, 2021
Higher the Usage, Higher the Burn
The average gas price on Ethereum, which had declined towards the end of March, falling as low as in one-digit in June only to slowly starting to pick up in July, reached 64.50 gwei on Thursday, as per Ycharts.
The median gas fees skyrocketed briefly on Thursday, which is feeding to the increasing amount of ETH getting burned.
“It’s a good thing high fees are now a feature, not a bug!” commented Avi Felman of BlockTower.
The biggest contribution to the ongoing jump in gas fees is renewed interest in non-fungible tokens (NFT) as shown by the top gas guzzlers. Currently, NFT marketplace OpenSea is using 12.77% of all the gas on Ethereum followed by NFT play-to-earn game Axie Infinity, as per Etherscan. The regulars Tether, Uniswap, MetalMask, USDC are the other heavy users.
NFT’s popularity is also evident from the fact that the floor price of popular NFT pieces is going through the roof.
— DappRadar (@DappRadar) August 5, 2021
On Thursday, CovidPunks were driving the spike in burned ETH.
Overall, the NFT space amassed over $1.2 billion in sales volume during July and besides the popular Axie Infinity, which became the most valuable NFT collection ever with more than $830 million in trading volume, about 80% of it the total volume comes from Ethereum’s primary and secondary markets.
The lion’s share of total NFT volume is currently happening on Ethereum which only spells good things for its price.