How $ETH can achieve $100000 by 2023 and a plea for $ETH bulls to dream bigger dreams
EIP-1559 was first proposed by Vitalik Buterin in 2018 and is the most anticipated upgrade in Ethereum’s history. Before we go into the details, here is a TLDR for what EIP-1559 is all about:
- Aims to make Ethereum's transaction fees less volatile and more predictable,
- Removes the problem of overpaying for transactions, also helps to reduce uncertainty for users delay in transactions due to chance in Gas Fee.
- Will help speed up ETH's TPS, to the moon 🌕
- EIP-1559 will also enable a more seamless experience for Ethereum's global community and its layers of dapps ~ Layman: More like a chance in UX 🖥
Instead, there are two fees - One is called Base fee, and the second one is called Inclusion fee, or a tip for the miners. The base fee is burned, while the inclusion fee (tip) goes to the miners.
Block sizes are now dynamic and will increase or decrease depending on the state of the network congestion. The maximum gas limit per block will now be 25 million, which is 2x the current gas limit per block of 12.5 million.
12.5M ▶ 25MHowever, the target gas limit per block will be kept at 12.5 million, but in the state of transient congestion, bigger blocks will be used to accumulate more transactions.
🌩: $ETH has undergone a supply shock equivalent to 3 Bitcoin Halving events, Along with the transition to POS (Proof of Stake)
📉: EIP-1559 will also play a large role in the net future decrease of $ETH sell pressure, At the time of writing this blog, 3644.58 ETH ~$10Million of $ETH is burned within 15.4Hrs of Network Upgrade
🦄: At this pace, Uniswap alone will burn 350,000 ETH/Year (0.0031% of Supply)
- ⏳6.5Million $ETH already staked in $ETH 2.0, cutting more than 5% from the supply ~$17B in Value
- 🔐 $ETH locked in Defi, More than 8.25% of Ether supply is locked in Defi Projects ~$28B in Value
- $ETH's EIP-1559 fee burn seems to be working effectively, burning fees and pricing block space on Ethereum dynamically so that block sizes on average hit a healthy target.
“Annualizing these figures, this means that between 800,000 — 2.4 million ETH is projected to be burned in 2021.”
This base fee will be burned, thereby putting deflationary pressure on Ethereum.
To put this in perspective, the issuance rate of Ethereum stands at 4.5% per year and according to the estimates, the issuance rate once the proposal is implemented will be 0.5 - 1%. 🧨 This base fee will be burned, thereby putting deflationary pressure on Ethereum.
This is HUGE!
If EIP-1559 was live yesterday, it would have burned roughly 17,000 ETH. Annually that equates to over 6.2 million ETH! It will have more effect than 3 Bitcoin halving
So far, experts and community members alike are demonstrating positive sentiment toward the London upgrade ✅
“The much anticipated EIP1559 network upgrade was a huge day for the Ethereum cryptocurrency ecosystem. Now every transaction, NFT purchase or loan on the Ethereum network will result in ETH being burned out of existence, making ETH a deflationary and inflation-busting asset,” noted Ross Middleton, CEO DeversiFi
He compared the new ETH burning mechanism to traditional stocks, Saying that it is an equivalent of “Apple Inc burning AAPL shares every time someone bought something from the Apple App store or made an in-app purchase.”
If you want to learn more about this improvement proposal, have a look at the following resources:
- 👉 EIP-1559 GitHub (official source)
- 👉 Ethereum Notes (official source)
- 👉 CoinDesk (a brief guide)
Disclaimer: Written by an $ETH Bull 📈