The last few days have been eventful for the largest altcoin by market cap, Ethereum. Spearheading the latest developments is the EIP-1559 upgrade that launched on the altcoin’s network earlier in August. The first significant event for Ethereum is registering its first deflationary day on Sept. 3 after more Ether was burned- as proposed by the recently deployed fee-burning feature- than the ones mined or produced by miners on the network.
Secondly, Ethereum reached an all-time high on its mining difficulty. The last event is as significant as the first two and related to the first- the amount of Ether burned on the network has reached a milestone of 200,000 ETH, an additional 100k to the previous one reported two weeks ago. All these events have joined forces to position Ethereum’s price just a few dollars short of $4k and 10% shy of its $4,356 all-time high it attained back in April.
Ethereum’s Hash Rate Stabilizes, Reaches All-time High
In the wake of China’s crypto mining ban, Bitcoin’s hash rate was devastatingly hit, plunging to the depths as the majority of global hash power came from the Asian region. Mining difficulty also cowered to the pressure, registering its lowest level in June. Conversely, Ethereum’s hash rate managed to remain stable since most of its mining power comes from regions in North America and Europe and less from China. Although its hash rate had declined in August, it has rebounded going beyond its previous high alongside mining difficulty.
What the surge in mining difficulty represents is that selling pressure on miners has reduced- that they now prefer to hold their Ether instead of selling. This is also indicative of a price increase on Ethereum as revealed in the past few days. As of press time, Ethereum is trading at $3,907 after surging a week ago during an altcoins’ breakout that was led by the digital asset itself.
DeFi and NFT Activities Charged With Increase in Gas and Burned Fee
Meanwhile, activities in the emerging markets of decentralized finance and non-fungible tokens (NFTs) are behind the increase in burned fees. The last few weeks have seen trading volumes on both DeFi protocols and NFT marketplaces shoot up to the zenith. According to available data, the amount of ether burnt per minute is 4.25 ETH valued at $16,604 based on the asset’s current price.
High transaction fees have also resulted from the traffic, which questions the purpose of the EIP-1559. However, in a separate report, it was clarified that the EIP-1559 upgrade is for fee stability and not fee reduction. Beyond this, it is set to make Ethereum a deflationary asset, something that has already begun. Ethereum’s circulating supply (no total supply) will be reduced as the fee burning process continues. An event that is likely to positively affect the price of the altcoin if demand remains constant.