Calculation: 1.83 million ETH may be burned in the next year, and the inflation rate will be less than that of Bitcoin

Wu Shuo Author | Wu Zhuocheng

Editor of this issue | Colin Wu

Wu Shuo Author | Wu ZhuochengEIP-1559Editor of this issue | Colin Wu

we understand

The mechanism is now trying to estimate the burning amount of the base fee in the next year. According to Ethereum core developer Tim Beiko, the base fee is expected to account for 25%-75% of the total transaction fee. According to the actual data, since the launch of EIP-1559, the base fee has accounted for about 66.85% of the total fee expenditure. The specific calculation logic is as follows:

The data shows that as of the 13283rd block after the upgrade, a total of 9482.2 ETHs have been burned; in addition, according to the statistics of the Spark Mining Pool, the handling fee accounted for 14.39% of the total mining revenue in the past 24 hours, and the block reward accounted for 81.3%. It can be calculated that the total handling fee after the upgrade is about 4702.15 (13283*2*0.1439/0.813) ETH. Therefore, the base fee accounts for about 66.85% of the total fee expenditure (including the fee earned by miners and the base fee burned). This number will fluctuate, but theoretically the average should be greater than 50%. Because when the transaction is not active enough, the proportion of base fee is relatively high; and even if the transaction is extremely active, the proportion of tip will only increase in a short period of time. As the base fee surges at a rate of 12.5% ​​per block, the total procedure Expenses will instantly reach an unbearable height for ordinary people. Referring to the first ten minutes after the start of EIP-1559, the average block utilization rate exceeded 90%, and the base fee also rose from 1 Gwei in the first block to 42.7 Gwei in the 64th block, and then stabilized at 35- Between 55 Gwei.

Let's calculate now, if EIP-1559 was implemented when Ethereum's mainnet was launched in August 2015, how many ETHs have been burned so far? The data shows that as of August 6, the historical transaction fee of Ethereum was nearly 4 million ETH. If 66.85% were burned, the total amount of ETH destroyed would have reached 2.674 million. The market value is as high as 8.02 billion US dollars (assuming the currency price is 3000 $), surpassing ETC, ranking 18th in the total market value of cryptocurrencies.

Looking at the chart above, we can also see that ETH handling fees have increased sharply since the second half of 2020, and since May 10, 2020, the daily trading fee has not been lower than 1,000. This is the beginning of the DeFi summer, which exploded user demand for Ethereum and opened the era of high gas. During this period, the total handling fee was about 3.334 million. If there is a base fee, it means that 2.23 million ETHs were destroyed during this period, an average of 1.78 million a year. Of course, the premise of this estimation method is that EIP-1559 cannot reduce the gas fee, but only makes it more stable and predictable.