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36% of New Ethereum Coin Issuance Over 2 Days was Burnt
August 8, 2021
Published by Violet MC
At the first look, EIP 1559 looks to be working successfully. However, a closer look at the numbers can say otherwise. Since the activation of Ethereum Improvement Proposal (EIP) 1559, the network has removed from circulation. Or “burned,” them over 5,000 ETH (+1.47%), worth nearly $14 million. This shows 36% of total new coin issuance over the same time period.
Ethereum Expansion
Average fees on Ethereum have expanded slightly since the upgrade went live on Thursday at 12:33 (UTC), rising from 0.003 ETH to 0.005 ETH. In addition block sizes, measured on Ethereum in units of gas, have been trending as predicted toward the block gas target of 15 million gas.
At first sight, EIP 1559 looks to be working successfully as we said. It is burning fees and pricing block space on Ethereum dynamically so that block sizes on average hit a healthy target. But, with a closer check up, there is proof that EIP 1559 may not be so productive in its main goal to make fees on the network more predictable for users.
Block size changes
Under EIP 1559, the mined blocks on Ethereum swings dramatically from being 100% full to nothing and empty. The cause for this, is the chair of the bi-weekly All Core Developers meeting. And it is because the pool of transactions qualified to be contained in a block becomes smaller and larger depending on the minimum fee, or “base fee,” decided by the network based on Tim Beiko saying.
“Say you have a block that raises the base fee because it’s full,”. Beiko said in an interview with CoinDesk. “It’s possible that by the time the next block shows up, there’s just not been that many new transactions who are willing to pay this higher price.”
Fee anticipation and consistency
Pseudonymous Ethereum user “Face Shaver” named this a “misalignment of incentives”. Which can make a bunch of problems. The first and the most important problem is being a lack of fee anticipation and consistency for the average user.
“It’s not that easy for the average user to predict what the fee will be for the next one or two minutes,”.Shaver mentioned it in an interview. “If you are [trying] to get in, either in this block or the next block, the most [fee] volatility you face is ⅛ of the current base fee, but if you think of the average user as someone who is price sensitive, and so is willing to wait one, or even something like three minutes for their transaction to go through … then you have to consider what happens to the fee in next three minutes.”
predicting what the best transaction fee on Ethereum will be in three minutes. Or more is just as difficult with EIP 1559 as it was before EIP 1559. Based on what Shaver and Beiko said. EIP 1559 aids price transactions for users in the moment. However it doesn’t help users to anticipate what fees will be in the next moment. For the reason that the supply and request dynamics for block space differ with each block.
Moreover, based on Beiko, like this oscillations affecting on block sizes and base fees were always anticipated from EIP 1559. But, Beiko says that the average user can still have profit from knowing the optimized base fee of sending a transaction on Ethereum in the moment. And that is without having to guess or prediction fees of future blocks.
Moreover, based on Beiko, like this oscillations affecting on block sizes and base fees were always anticipated from EIP 1559. But, Beiko says that the average user can still have profit from knowing the optimized base fee of sending a transaction on Ethereum in the moment. And that is without having to guess or prediction fees of future blocks.
Financial Motivation
The smart and fast users will be discreet not to spend more in fees than completely necessary. If users are safe and assured that fees will grow during the next block. There is a financial motivation contain more transactions in the present time block than the next. But, if users are confident that fees will reduce during the next block.There is a financial incentive to contain more transactions in the next block than the current one.
These normal oscillations among heavy and light blocks, based on Mojtaba Tefagh. The assistant professor at Sharif University of Technology, may mean the amount of gas used in each block will have tendency over the long term above the block gas target. Which this can make difficulties for network node operators responsible to growing and maintaining transaction data.
These normal oscillations among heavy and light blocks, based on Mojtaba Tefagh. The assistant professor at Sharif University of Technology, may mean the amount of gas used in each block will have tendency over the long term above the block gas target. Which this can make difficulties for network node operators responsible to growing and maintaining transaction data.
Block Size
“If the variability in block size is high, people can send more transactions, on average. So if you just adapt the extreme oscillation of alternating between a full block and also an empty block, you can spend much more gas than the target and still the [base fee] would not go up,”. Tefagh mentioned in an interview. “We are incentivizing people to create volatility and as they create volatility, we let them spend more gas.”
At the moment, both developers and researchers like Moj are taking a wait-and-see reaching to recognize the full effects of EIP 1559 on the usability of Ethereum for users and dapps.
Based on blockchain analytics firm Dune Analytics, over 90% of transactions on Ethereum forced the profits of EIP 1559 two days into the upgrade’s activation.
Based on blockchain analytics firm Dune Analytics, over 90% of transactions on Ethereum forced the profits of EIP 1559 two days into the upgrade’s activation.