EIP-1559 is working! Maybe not so much in the realm of improved UX but certainly as a deflationary mechanic it appears to be doing it's job.
It's only been 1 week since the London hard fork was activated which included EIP-1559, and already 31,000 ETH have been permanently removed from circulation, that is outstanding!
At this rate apx 1.6 Million ETH would be burnt over the course of a year.That's the equivalent of 1.3% of supply burnt in 1 year.
However we know that the landscape is going to change over the coming year with the scheduled introduction to proof of stake, not to mention additional ETH is produced as a reward every time a new block is produced. The math isn't really that simple but it's puts things into perspective.
In just the past week alone $100 Million worth of ETH has been permanently removed from circulation thanks to EIP-1559.
As I discussed in a previous post the Ethereum network has it's time bomb set for sometime in December 2021.
The "difficulty time bomb" through EIP 3554 introduces code that essentially eliminates mining rewards through proof of work by a specific date.
Could this be a double whammy of sorts? We have EIP which has introduced a deflationary mechanic to burn a portion of block production rewards, and it appears to be a significant amount too!
Then with a switch to proof of stake I have to imagine incredible amounts of ETH will continue to come off of exchanges and be locked up (staked) to secure nodes for the purpose of block production.
That's a 1 - 2 punch!
Definitely bullish on ETH again!
I have a feeling that the difficulty time bomb will be moved from December and pushed back to give dev's more time to iron out the kinks before the big switch, but I could be wrong.
As long as the switch happens before the beginning of the next halvening cycle I think ETH will be in a good place, like a really really good place for the next big run up.
Ciao for now,
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