Ethereum network consumes $395,000 worth of ETH per hour after Dunn upgrade

Through the new transaction fee mechanism introduced in Ethereum’s London upgrade on August 5, approximately 2.3 ETH is destroyed every minute.

The much-anticipated London hard fork went live on Wednesday, ushering in the EIP-1559 upgrade that adjusts gas fees. Part of this adjustment introduces a mechanism that will consume part of the collected base fee.

According to various existing counters, the total amount of ETH destroyed since the upgrade went live about 14 hours ago at the time of writing is approximately 3,395 ETH. Etherchain reports an average destruction rate of 2.36 ETH per minute. This is equivalent to $6,596 per minute, or about $395,000 of ETH per hour at current prices.

Another counter, Ultrasound.money, reported that a total of 3,390 ETH was destroyed, worth a whopping $9.5 million at the current price of about $2,800. The tracker reported that the popular NFT marketplace OpenSea was the largest ETH destroyer, destroying 374 ETH, worth just over $1 million, since the upgrade was launched.

In second place is Uniswap V2, which has destroyed 263 ETH, or $740,000, at the time of writing. Commenting on the destruction rate, Uniswap founder Hayden Adams said that if things continue at the same pace, the protocol could destroy up to 350,000 ETH per year, worth nearly $1 billion.

EIP-1559 has been launched for two hours

Uniswap (v2+v3) is currently undergoing partial destruction, and 80 ETH has been destroyed so far

At this rate, Uniswap alone would destroy 350,000 ETH per year, worth nearly $1 billion

Congratulations to everyone who made EIP-1559 a reality. This is a huge win for Ethereum!

— Hayden Adams (@haydenzadams) August 5, 2021

The Bankless DeFi newsletter provides some data that attempts to predict how this will affect future supply. Since base fees range between 25% and 75% of total transaction fees, manual calculation and prediction is difficult.

It modeled burn rates within this range using fee data generated in 2021 and concluded:

“Annualizing these numbers would mean that between 800,000 and 2.4 million ETH are expected to be destroyed in 2021.”

If combined with the reduction in block reward issuance resulting from the merger to proof-of-stake, fee burn could lead to a deflationary supply of Ethereum, which would make it the new meme that more and more people are calling “ultrasound money.”