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Ethereum (ETH) Users Paid $1 Billion in Fees in 30 Days, Here’s How Much ETH Burned

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With EIP-1559 activated, Ethereum inches closer to the status of deflationary asset

Token Terminal, an on-chain analysis platform, has shared an infographic on Ethereum network fees and the effects that EIP-1559 is having on its supply.

82.45% of network fee amount destroyed over last 30 days

According to statistics shared by TokenTerminal, Ethereum (ETH) network users have paid more than $1,000,000,000 in equivalent for having their transactions added to Ethereum’s blocks.

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During the same period, more than $824,000,000 in equivalent were destroyed.

As covered by U.Today previously, in periods of high network activity, more Ethers are burned than created. Thus, there are some periods in which the Ethereum supply is deflationary.

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This mechanism was actvated on Aug. 5, 2021, on Ethereum’s mainnet. By mid-October, more than 500,000 Ethers have been destroyed. This process reduces selling pressure and is oftenly treated as a bullish catalyst for the second cryptocurrency.

Ethereum is on its way to The Merge

The Ethereum 2.0 Merge, i.e., the transition from proof-of-work (PoW) to proof-of-stake (PoS) consensus, has been activated in an interoperable devnet.

On Oct. 8, 2021, Ethereum core developers activated The Merge in a multi-client closed developer network with Besu, Erigon, EthereumJS, Geth, Nethermind, Nimbus, Lighthouse, Lodestar, Quilt, Prysm and Teku clients onboard.

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As explained by Ethereum Foundation’s Tim Beiko, from Q4, 2021 – Q1, 2022, Ethereum’s Pithos devnet will be stress tested by Ethereum contributors and enthusiasts.

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Ethereum

Ethereum Price Analysis: ETH rejects further downside at $4,000, moves into consolidation?

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  • Ethereum price analysis is bullish today.
  • ETH/USD set another higher low at $4,000 overnight.
  • Upside is currently tested again.

Ethereum price analysis is bullish today as we saw a higher low set above $4,000, leading to a slight recovery so far today. Likely, ETH/USD will continue higher over the next 24 hours as bears are exhausted after a strong selloff on Friday.

Ethereum Price Analysis: ETH rejects further downside at $4,000, moves into consolidation? 1
Cryptocurrency heat map. Source: Coin360

The cryptocurrency market saw bearish momentum return again, with Bitcoin down by 1.3 percent. Ethereum follows, with a loss of 1.09 percent, with the rest of the top altcoins performing even worse.

Ethereum price movement in the last 24 hours: Ethereum drops again, finds support around $4,000

ETH/USD traded in a range of $3,990.68 – $4,162.30, indicating strong volatility over the last 24 hours. Trading volume has declined by 30.49 percent, totaling $13.36 billion, while the total market cap trades around $486.6 billion, resulting in a market dominance of 19.82 percent.

ETH/USD 4-hour chart: ETH recovers again

On the 4-hour chart, we can see the Ethereum price moving higher again today as bulls are eager to test upside after a higher low set overnight.

Ethereum Price Analysis: ETH rejects further downside at $4,000, moves into consolidation?
ETH/USD 4-hour chart. Source: TradingView

Ethereum price has seen strong volatility this week. After dropping more than 15 percent last week, support was found around $3,950. Further higher low was set early this week, resulting in more upside reached later.

A strong higher high at $4,550 was set on Thursday, indicating that the overall market structure has turned bullish again. However, a strong spike lower followed on Friday, leading ETH slightly below the $3,950 previous major swing low.

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Since then, the Ethereum price has retraced to retest the $4,200 mark as resistance before starting to move lower yesterday. Overnight, rejection for further downside was seen around $4,000, leading to some bullish momentum returning again Today.

Ethereum Price Analysis: Conclusion 

Ethereum price analysis is bullish today as we expect more upside to follow over the next 24 hours after a higher low was set around $4,000 yesterday. Alternatively, ETH/USD could start to consolidate in an increasingly tighter range if a lower high is set later today.

While waiting for Ethereum to move further, see our articles on the Best Crypto Wallet 2021, Decred Wallet, and Ripple vs SEC.

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Despite All The FUD, Ethereum (ETH) Price Stands Strong Above $4000!

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The Ethereum price after breaking the symmetrical triangle towards the north and was on the verge to hit the immediate resistance at $4742. However, a huge plunge dragged the price just below $4000 and it recovered within no time. Currently, the ETH price is swelling and trending again above $4100 that may march beyond $4250. 

At the press time, the 2nd largest crypto is sustaining above $4100 and may test one of the important resistance zones at around $4250. Yet before marching towards the highs close to ATH, the possibilities of the asset revisiting levels below $4000 surface the waters. And hence providing a good opportunity for the traders to enter the trade at a discounted price. 

The asset’s ascending parallel channel appears to be still intact and hence as per a popular analyst, the ETH price may revisit the lower zone of the channel again. 

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The analyst feels the asset may revist to the liquidity zone in between $3880 and $3671 in the upcoming days. Also, Ethereum may get the required strength and boost on revisiting these levels. As the levels around $3700 – $3600 are a good buy-zone for the asset. Therefore the price may reverse the trend as it hits the lower trend line. 

The flip may still be pretty challenging as the ETH price initially needs to break the downtrend line by surpassing $4190. After sustaining successfully above these levels, Ethereum may range in the upper zone of the channel. This is when the actual bull run may initiate as to surpass the middle line, the price needs to form a new ATH. 

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Vitalik Buterin has a new proposal to reduce gas fees for Layer 2 scaling options

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  • The new EIP-4488, co-written by Vitalik Buterin, is seeking to bring down gas fees for Layer 2 scaling options, but is a temporary solution. 
  • It will achieve this by reducing transaction calldata cost and capping the total transaction calldata in a block.

Ethereum’s high transaction costs have been well-documented, and have been a key factor in the rise of Ethereum killers. One of the solutions that seemed to be working was the Layer 2 scaling options that leverage Ethereum’s security but cut down on costs. Even these have become increasingly expensive in recent months, however. Vitalik Buterin has come up with a new proposal that is seeking to keep the gas fees for L2s low, but it can only be temporary.

EIP-4488 – Vitalik Buterin’s short-term fix

In his new Ethereum Improvement Proposal (EIP) 4488, Buterin recognizes that while the Layer 2 solutions have lowered the costs by a great margin, they are still not low enough for mass adoption.

“Hence, a short-term solution to further cut costs for rollups, and to incentivize an ecosystem-wide transition to a rollup-centric Ethereum, is desired,” he noted.

Layer 2 scaling options for Ethereum, such as Polygon, mainly rely on either Optimistic Rollups or zero-knowledge (ZK)-Rollups. Together with sharding, they are the primary method that Ethereum 2.0 will leverage to scale.

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Optimism family of rollups lowers fees on Ethereum by 3-8x, while ZK-Rollups, which have better data compression and can avoid including signatures, have fees 40-100x lower than the base layer.

Though much lower, these fees are still way too expensive for many users, Buterin acknowledges. In the long term, sharding will solve this challenge.

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“However, data sharding will still take a considerable amount of time to finish implementing and deploying. Hence, a short-term solution to further cut costs for rollups, and to incentivize an ecosystem-wide transition to a rollup-centric Ethereum, is desired,” he noted.

EIP-4488 will provide a solution by decreasing the calldata gas cost. This is the compressed transaction data component from rollups running at scale once it’s committed to the main Ethereum chain.

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Decreasing the calldata gas cost by itself would present a new security concern. It would, in turn, increase the maximum block size from about 1.9 MB to 10 MB. “This would push the Ethereum p2p networking layer to unprecedented levels of strain and risk breaking the network,” Buterin notes.

As such, just decreasing the calldata gas cost won’t do. EIP-4488 solves this by adding a limit for the total transaction calldata that can be in a block.

The proposal would be a backward-compatible gas repricing that would require a scheduled network upgrade.

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Ethereum users wouldn’t be affected and would continue to operate without any changes. The miners, as well, would continue to operate unaffected. But they will now have to adhere to a new rule that bars them from adding new transactions to a block when the total calldata size reaches the maximum.

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