Ethereum burning goes strong post the EIP-1559 activation last week. Here’s a look into how much it has really impacted the miner revenue.
It’s been a week since the Ethereum London hardfork and the popular EIP-1559 fee burning activation. As per the data by Ultrasound.money, nearly 32,000 Ethers have been burned so far worth a staggering $100 million.
The EIP-1559 activation has introduced a “base fee” model along with the ETH burning process. Thus, the transaction fee that once went to miners now goes to into the burning process through the issuance of burn blocks.
Ethereum EIP-1559 Activation
Once the amount of burnt coins exceeds the issuance, the Ethereum blockchain will enter a deflationary cycle. With the EIP-1559 activation, there are over 800 “deflationary blocks” on the Ethereum blockchain network.
Interestingly, data shows that EIP-1559 implementation hasn’t much affected the miner revenue much. Data from Coin Metrics shows reduced revenue from transactions has no significant impact on total miner revenue. In fact, post the EIP-1559 activation, the Ethereum miner revenue is up 7.1% hitting a two-month high.
There could be many reasons for it. The bullish breakout in the ETH price over the last two weeks could be the reason behind the revenue surge. Speaking to CoinDesk, Anand Gomes, co-founder of crypto trading platform Paradigm, said: “London … is driving this activity [and] it’s mostly institutional.”
Gomes’ added that the ETH options market has witnessed an ultra-bullish flow. As per data on Paradigm, there’s a bull call spread for $40,000-$50,000 strike price expiring in March 2022.
On the other hand, the trading activity in Ethereum-based NFTs has shot up significantly. On-chain transactions for transferring NFTs have surged by 75% in the last seven days. This has also contributed to a surge in miner revenue.
Ethereum: An Ultra-Sound Money
Ethereum continues to receive major backing from some of the top entrepreneurs. Shart Tank investors Kevin O’Leary, who recently entered a multi-year deal with FTX exchange, showered praises for Ethereum. He said:
“If Bitcoin is sound money because of the 21 million coin supply ceiling, Ethereum enjoys the same benefit now. It’s ultra sound money, because there’s no supply floor […]. Ethereum will be thought of like a traditional business and can be analyzed like one, sort of like using a cash flow model”.
Ethereum has already been a great performer in 2021 and many analysts believe its potential to climb further. Some analysts expect the ETH price to touch $10,000 by the end of the year or early 2022.
ETH has already outperformed its arch-rival Bitcoin this year. While bitcoin gains for 2021 currently stand at 50%, the ETH price has surged by 300% this year. It means ETH investors have minted 6x more profits than Bitcoin investors.
At the time of writing, ETH is trading at around $3,100.