The much-hyped Ethereum London upgrade was activated on Thursday setting the stage for several important changes to the world’s second-largest blockchain and cryptocurrency by market capitalization.
The upgrade led to a hike in the Ethereum (ETH) prices and the digital coin is currently trading at above $2,700.
Ethereum has been facing issues with scalability especially because it is the most used blockchain by decentralized apps developers. Recently, Ethereum has been forced to contend with issues of congestion and high unprocessed transactions following the surge in interest in non-fungible tokens (NFTs). Also, transaction fees have been quite erratic and at times very exorbitant.
The London upgrade is geared towards solving most of these issues by burning (or destroying ether coins) and how the transaction fees are calculated to make them more predictable.
In a nutshell, the Ethereum London upgrade is adding several ‘lanes’ to the Ethereum ‘highway’ to ‘decongest the traffic’ while homogenizing the ‘toll prices’.
The current burn rate is 2.36 ETH per minute
According to Etherchain, an average of 2.36 ETH are being burned per minute.
If you take 2.36 ETH multiplied by the current ETH price of roughly $2,750, you will see that about $6,490 worth of ETH is being destroyed every minute through the new transaction fee mechanism introduced by the London upgrade.
You may probably be wondering, why destroy ether coins while more people are looking to purchase them?
The ether coins that are being destroyed or burned are actually from the base fees collected for verifying transactions.
After conducting modeling of the involved figures, the Bankless DeFi newsletter projected that between 800,000 and 2.4 million ETH will be burned by the end of 2021.