EIP-1599 claimed to burn 70% of ethereum gas fees

The Ethereum blockchain network is set for a major upgrade not only with its gradual transition process towards a “proof-of-stake” consensus mechanism but also with the Ethereum Improvement Protocol (EIP) 1559 expected to significantly revamp its monetary system.

Under the EIP-1559, gas fees in the network are proposed to be split into two elements, namely: a tip set by a transaction’s sender and a base fee which is burned, with the latter claimed to transform ether (Ethereum’s native token) to a deflationary crypto-asset capable of rivaling bitcoin in terms of store-of-value.

However, industry pundits point out the shift is not an overnight success, with the network needing to fully migrate to a proof-of-stake mechanism for the deflationary aspect of the improvement protocol to make its presence felt. Some also worry Ethereum might not get into a level of traffic where inflation is outpaced by token burns.

Ethereum 2.0 and inflation

According to Cryptonews, developer Ryan Berckmans explained, “EIP-1559 is expected to burn an estimated 70% of fees, that’s the deflationary pressure.” He, however, cautioned the effect won’t be immediate.

Berckmans further elaborated that when the improvement protocol launches on July 14, Ethereum won’t instantly become deflationary owing to the fact that proof-of-work mining will still continue to generate net inflation. This won’t stop until the network has successfully switched to proof-of-stake at which point Ethereum 2.0 will be finally rolled out and inflation is expected to turn negative.

Ethereum vs. Bitcoin

With the question of whether Ethereum is better than Bitcoin (and vice versa), the former’s camp claims the EIP-1599 and proof-of-stake consensus mechanism will give it a distinct advantage.

But for now, the two cryptocurrencies having the same namesake as with their networks are both down and still reeling from the recent market plunge with bitcoin trading at $37.5K and ethereum changing hands at $2,304.

 

Image courtesy of Cointelegraph News/YouTube

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