EIP-1559 or Ethereum Improvement Proposal 1559 aims to improve the blockchain’s fee mechanism after its release in August. Ethereum has been burning transaction fees instead of paying miners.

Ethereum Network Burned 603,452 ETH

According to a report published on October 23, Ethereum valued at 603,452 ETH, around $2 billion has now been burned by the Ethereum network, driving the cryptocurrency melting pot to record highs.

This mechanism removes about $30 million of ETH from circulation every day by sending it to an invalid address. This replaces the previous method of paying ETH to miners to verify transactions.

EIP-1559 is set to accelerate the long-awaited upgrade from Ethereum 2.0. Upgrade to use Proof of Equity to verify Ethereum transactions, a power-saving algorithm that replaces the computationally intensive proof of work mechanism.

Although Ethereum is expected to “merge” with the proof-of-stake blockchain Ethereum 2.0 in early 2022, it will be several years before Ethereum 2.0 has the same smart contract functions as Ethereum today.

Was EIP-1559 Aim to Lowers Gas Fees a Misconception?

A common misconception about EIP-1559 is that it lowers gas costs – for example, it still costs $38.69 to swap tokens on Uniswap, while it costs hundreds of dollars to mint NFT. On the contrary, EIP-1559 aims to make Ethereum’s transaction fees more predictable. Proof-of-work miners are not satisfied with EIP-1559 as they spend a lot of money on graphics cards to mine Ethereum.

By reducing the supply of Ethereum, EIP-1559 helped drive up the price of Ethereum. This week the token hit $ 4,366, a record high. But Ethereum’s rise is due to a new Bitcoin futures ETF that was suddenly approved by the US Securities and Exchange Commission last week.