Polygon Rolls Out EIP 1559 Implementation to Burn MATIC Token
Ethereum scaling solution Polygon announced that it is rolling out a testnet implementation of Ethereum Proposal 1559 to introduce a burning mechanism to its network.
This implementation is to burn Polygon’s native MATIC token, the annualized burn is estimated to be 0.27% of the total MATIC supply, and also for better fee visibility, the team said.
EIP 1559 went live on Ethereum mainnet with the London hard fork on August 5th, and since then, 1.18 million ETH worth $4.6 billion have been burned, as per Dune Analytics. By burning nearly 150k ETH, Uniswap (v2+v3) accounts for the largest amount of Ether burned, followed by Opensea, Ether transfers, USDT, MetaMask, USDC, Axie Infinity (AXS), and SushiSwap (SUSHI).
Due to increasing amounts of Ether being burned during periods of high fees, it had led to a continuous decline in ETH issuance, making it a deflationary asset.
Now, Polygon wants to bring the same mechanism to its chain, which it says is a “much-requested” upgrade to the network.
The upgrade has already gone live on the Mumbai testnet on Dec. 14th, at 8 a.m. UTC.
Under the mechanism, there is a discrete base fee for transactions to be included in the next block and a priority fee to speed up processing. The base fee, which fluctuates depending on network congestion, is burned.
Polygon says this will allow its users to estimate costs better as the base fee is the minimum price for inclusion in the next block. According to Polygon, users of Dapp built on its network will benefit from more predictable gas prices.
“These changes have far-reaching implications for all of Polygon’s stakeholders,” said the team.
In its announcement, the team noted that Polygon has a fixed supply of 10 billion MATIC; as such, any reduction in its tokens will have a “deflationary effect.” This deflationary pressure is also expected to benefit both validators and delegators as rewards are denominated in MATIC.
The basic fee burn mechanism will also result in fewer spam transactions and less network congestion. Validators, however, would no longer receive the total amount of the fee but only the priority fee in the future.