OpenSea Leads Ethereum Fee Burns in September 2021

The amount of Ethereum burned by EIP-1559, a mechanism that burns transaction fees that used to go to miners, has surpassed 200,000 ETH (about $675 million at the prices at which it was burned).

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The amount of Ethereum burned by EIP-1559, a mechanism that burns transaction fees that used to go to miners, has surpassed 200,000 ETH (about $675 million at the prices at which it was burned).

A total of 344,462.22 ETH has been burned so far according to ethburned.info. This is equivalent to $983,780,655.90

At current rates:

  • The mechanism burns $696,514, worth of ETH, every hour.
  • $15,803 is burned every minute.
  • $27,767,042 have been burned in the last 24 hours

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SEE ALSO: OpenSea Sees Over 800% Growth in NFT Sales, Blows Past $3 Billion in August 2021

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EIP-1559 was introduced on 5th August 2021 as part of upgrades leading up to a new version of Ethereum, Ethereum 2.0.

The new version transitions the blockchain from proof-of-work (PoW) to proof-of -stake (PoW). PoW became unfavourable as the network expanded since it is a computationally intensive way of verifying transactions.

On the other hand, PoS does not employ mining, requiring users to stake their ETH to become a validator in the network. This is more energy-efficient.

Currently, the blockchain has a mix of both consensus mechanisms as it transitions to full PoS.

The most significant improvement in the Ethereum London Hardfork, EIP-1559, introduced a transaction fee burning mechanism with the intention to restructure processing fees on the platform.

It is estimated that Ethereum will “merge” with the proof-of-stake version of its blockchain later in 2021 or early 2022. However, it will take a few years before Ethereum 2.0 will have the same smart contract functionalities as Ethereum 1.0.

One anticipated side effect of EIP-1559 was that fees would reduce, or at least become more predictable. However, fees on Ethereum are still sky high and are getting higher due to the ongoing resurgence of NFT projects. 

As of this writing, a single swap on Uniswap costs $76.31, and an ERC-20 transfer costs $24.8. The biggest gas guzzler is NFT marketplace OpenSea, which used 11.65% of all gas on the Ethereum network in the past 3 hours and 15% in the past day.

In the last 30 days, leading dApps in Burning Fees include:

  • OpenSea – $122.3 million
  • ETH Transfers – $73.32 million
  • Uniswap V2 – $41.07 million
  • Tether – $40.70 million
  • Uniswap V3 – $24.03 million

Opensea has established itself as the leading NFT marketplace, with $3.08 billion in trading volume for the month of August 2021. This represented an 800% rise from the previous month. In what was a bumper month, by the middle of the month, trading volumes on the platform had blown up by more than 12, 000% compared to the beginning of the year.  

Despite the huge close to August, in the first week of September the sales volume on OpenSea dropped by almost 50% to $792 million from a pool of 156,811 traders. In the last 24 hours its trade volume is $9.53 million, which is almost 50% lower than Axie Infinity’s $18.82 million.

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RECOMMENDED READING: DeFi: A Comprehensive Explainer

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