update 14 September 2021

How Many ETH Will Burn After the London Fork?

Since its launch in July 2015, Ethereum has grown exponentially to be the second leading cryptocurrency in market value after Bitcoin. The platform’s growth has primarily been attributed to its smart contract feature, which powers the deployment of a wide range of applications, including oracles, decentralized finance (DeFi), decentralized exchanges (DApps), marketplaces, crypto-collectibles (NFTs), and developer tools. 

Despite its growth, Ethereum faces numerous challenges that hinder its usability. The scalability challenge is one of the biggest ones that Ethereum faces. The current state makes increases transaction fees and creates lengthy transaction delays. Ethereum’s scalability problem has worsened in recent months owing to a surge in NFTs and the explosive growth of DeFi platforms on the Ethereum platform.

To solve the challenges facing Ethereum, the community has proposed several changes to the network. These proposals are Ethereum Improvement Proposals (EIPs) and can be created by anyone within the Ethereum community, following a set of guidelines. The London Fork consists of five EIPs, and it is the latest upgrade on the Ethereum blockchain. More so, it aims to solve the scalability issue by simplifying payments of transaction fees. 

Part of the upgrade, which occurred on 5th August 2021, involves burning the ETH transaction fees. This should remove them from the circulating supply and, subsequently lower the network’s inflation rate. Here’s a look at how much Ether has burned so far following the upgrade!

The London Fork Upgrade

Ethereum has a long-standing scalability problem, which has worsened in recent months. That’s due to the exponential growth of applications built on the platform. As the scalability problem becomes more intense, estimating the optimal gas fees becomes more difficult. Users have to put up with unexpected delays as well as high transaction fees. 

Before the EIP-1559 upgrade, Ethereum was using a simple auction mechanism to estimate transaction fees. In this system, users must bid for how much gas they were willing to pay miners to add their transactions to the next block. Usually, miners would select transactions with higher gas prices and leave transactions with low gas prices pending. This auction mechanism caused some users to overpay by up to 5x to have their transactions confirmed. 

The simple auction price mechanism failed to offer proper cost pricing. Additionally, it caused a considerable divergence of transaction fees that different users paid in a single block. It assumed that the optimal level of usage was the same regardless of ETH demand.

EIP-1559 in a Nutshell

Vitalik Buterin proposed the EIP-1559 in 2018 to solve how the open auction mechanism determines the gas price. The EIP-1559 proposal focuses on designing a BASEFEE that the protocol can adjust in case of network congestion. The network capacity should increase to 16 million gas to accommodate this model. This way, the 50% network utilization matches the 8 million gas limit. When the network is above 50% capacity, the BASEFEE increases slightly and decreases below 50%. Since the network increments are finite, the maximum difference in BASEFEE from block to block is predictable. 

In this system, complex algorithms determine the fee by analyzing the network demand. In addition to the BASEFEE amount, users can tip miners with a small amount. A user can include more extensive information during high network usage to ensure fast transaction confirmation. The London fork consisted of EIP-1559 and four other Ethereum Improvement Proposals.

Changes Fomented by the London Fork

The London Fork brings several changes to the Ethereum ecosystem. To begin with, the Fork eliminated the open auction mechanism to determine gas fees, i.e., Gwei. Following the upgrade, the Ethereum network ceased holding a blind auction on every block to determine the gas price. Instead, Ethereuem’s protocol algorithmically defines the transaction fee (BASEFEE) depending on the overall demand on the platform. 

Having the network decide on a uniform gas price using an automated bidding system goes at extraordinary lengths. It would prevent discrepancies in transaction fees and the exploitation of users. However, it doesn’t necessarily mean that the gas fee prices will decrease. The BASE FEE system ensures accurate and fair gas fee predictions by automating the fee bidding system.

The London Fork also doubled the block size, meaning each block can now perform twice the number of transactions. The upgrade helped stabilize gas fees by rooting out sudden spikes in demand by doubling the block size.   

Another change that the London Fork brought is the burning of a part of every. The Fork consists of five Ethereum Improvements Proposals (EIPs), including EIP-1559 and EIP-3554.

These proposals bring several changes to the Ethereum ecosystem. Notably, the transaction fee. This should reduce the supply of ETH and possibly enhance its price. 

Burning is sort of a deflationary mechanism to reduce the supply of Ether and increase its value. However, experts claim that the London Fork won’t make Ether deflationary. That’s because the number of transaction fees burnt would never outdo network inflation. Nonetheless, removing the coins from the circulating supply would significantly help reduce the network’s inflation rate.       

How Many ETH Coins are expected to be burned after the London Fork? 

Currently, 273438.4 ETH at a value of $908,434,898.34 has been burned-according the block explorer Etherchain’s burn tracker. The current burn rate is at 3.82 ETH/min, equivalent to $12 749.32/min. There’s no definite answer to this regarding the number of ETH coins that should burn following the London Fork. This depends on the burn rate.

 At the current burn rate of 3.82 ETH/min, roughly 5 500 ETH should burn every day. Note that the burn rate isn’t permanent. Also, it is likely to decrease once the blocks become smaller. The burn rate is also dependent on the network demand. 

Closing Words

The London Fork is one of the most significant upgrades in Ethereum’s history. The automation of the gas fee bidding system brings the possibility of tipping miners. Also, it enables burning a part of the transaction fee to decrease the supply of Ether and enhance its value.

Following the Fork on 6th August 2021, 273438.4 ETH ($908,434,898.34) burned, causing the value of Ether to increase by 9%. The Ethereum network has also become more scalable and efficient with faster transaction speeds and lower gas fee volatility.  

price change

The London Fork is just one of the upcoming improvements on the Ethereum ecosystem. The network plans to migrate from the Proof of Work (PoW) model to the PoS (PoS) consensus mechanism, i.e., Ethereum 2.0, in early 2022. Take note that the London hard Fork changes are all temporary until the permanent Ethereum 2.0 update. 

More posts

Which Altcoins Made The News in H1 of 2021

Altcoins are constantly jostling to make a mark in the crypto world. After Bitcoin and Ethereum, the race to be the third cryptocurrency force keeps heating up every year. Many strong contenders with different use cases promise more than what the big two currently offer. As a result, many are making their mark in a big way, for good and not so good reasons, as long as they stand out from meme coins that ride the celebrity popularity wave and…

Top Altcoins with the Most Potential For 2022

In 2017, altcoins became a thing when thousands of Bitcoin competitors flooded the market. Today, many altcoins have evolved beyond expectations and are stand-alone products with unique real-world applications. Furthermore, they provide an opportunity for investors to diversify their portfolios. Identifying the best cryptocurrencies to invest in can be overwhelming for most newbies, primarily since thousands of them exist. We bet you're having difficulty finding the most promising altcoins in the crypto space. So, this article should help you get…

How to Use Ethereum Smart Contracts

Smart contracts might seem like complex cryptocurrency jargon to contemplate, but in reality, it's not. An Ethereum smart contract is an automated agreement between two parties written in code. Smart contracts have continued to bloom in the crypto space, and more is yet to come. One analysis shows that the wise contract market size might reach USD 345.4 million by 2021 at a CAGR of 18.1%. Ethereum smart contracts have had a notable impact in revolutionizing the crypto space and…

How Elrond Makes Smart Contracts Function Seamlessly

The Internet and blockchain technology are the precursors for an age that supports virtual digital currencies. As the world becomes more digital, the need for technological advancement is eminent. Above all, centralization is an ownership problem that decentralized finance fixes. Elrond network is a highly secure, fast, efficient, and scalable blockchain platform for distributed apps. Its primary objective is to construct a transparent architecture for different economies. Additionally, it aims to have low latency and high bandwidth transactions. Most importantly,…

Which Social Network Can Affect the Sentiments of a Crypto Project?

Social media is among the most revolutionary technologies of the 21st century. For example, networks like Facebook, Instagram, Twitter, Telegram have been affecting the lives of many globally. A social network can influence politics, sports, finance, marketing, and many more.  Crypto is one of the industries receiving the impact of social media influence. Since the launch of the first asset in 2009, social media has been driving the popularity of crypto. Assets like Bitcoin, Cardano, Ethereum, and Dogecoin have been thriving so much in social…

Celebrities With Proven High Amounts of Crypto Holdings

Cryptocurrencies are gaining popularity at a fast rate in recent times. A cryptocurrency is a form of electronic currency that uses a digital ledger to record its transactions. Third parties like the Central banks do not have control over cryptocurrencies. The growth rate and profitability of these currencies have attracted the attention of many people. Nowadays, many celebrities are already in the crypto business. This article will expound on the famous people who have invested in crypto-related projects and how…

Battle of the Altcoins: Crypto Projects That May Overtake Ethereum

Cryptocurrencies have grown both in adoption and popularity over the past two years. Even companies are onboard, with experts saying that it is the first step towards cryptos going mainstream. Bitcoin is in the lead with the highest market capitalization. Coming in second is Ethereum, leading the battle of the altcoins. Ethereum gained and is still gaining popularity because it was the first crypto after Bitcoin to bring more usability. Its usability extends from just a means of payment to smart contracts.…

Can You Gamble with Crypto in Las Vegas?

Las Vegas is best known for gambling, with an enormous concentration of world-class casinos and hotels. This entertainment hub, situated in Nevada, attracts thousands of tourists worldwide to experience glamour and gambling life. Following the massive growth of Bitcoin in recent years, Las Vegas has increasingly embraced it. Today, crypto has widespread use, especially as a mode of payment for dining, rent, cars, etc. Over fifty businesses in Las Vegas, Nevada, accept cryptocurrency as a mode of payment, pointing to the growing…

What Really Happens When Swapping Crypto?

The process of swapping crypto can be somewhat complex. Sometimes, you may end up lacking the exchange assets you need. For instance, you may want to exchange BTC for ZIL. Generally, there are very few exchanges that support direct BTC to ZIL exchanges. Therefore, in many scenarios, an individual will have to find a BTC trading pair. Exchange the BTC to another pair connected to ZIL, then complete by exchanging the second asset to Zil. Generally, following the whole exchange process involves two…

How Many ETH Will Burn After the London Fork?

Since its launch in July 2015, Ethereum has grown exponentially to be the second leading cryptocurrency in market value after Bitcoin. The platform’s growth has primarily been attributed to its smart contract feature, which powers the deployment of a wide range of applications, including oracles, decentralized finance (DeFi), decentralized exchanges (DApps), marketplaces, crypto-collectibles (NFTs), and developer tools.  Despite its growth, Ethereum faces numerous challenges that hinder its usability. The scalability challenge is one of the biggest ones that Ethereum faces. The current state…