$400M in ETH burned after Ethereum update
No doubt, the world is waiting for the upcoming transition of Ethereum from version 1.0 to 2.0 with bated breath. In the new version, the proof-of-work system will be replaced by proof-of-stake, leaving no place for miners in this blockchain.
Miners won’t get the transaction fees
To speed up the transition to Ethereum 2.0, the network developers are constantly releasing various updates. For example, on 5th August, an update EIP-1559, aimed at stabilizing volatile transaction fees, came into effect as part of the London Hard Fork. In addition, the update makes mining much less profitable since now transaction fees are burned instead of going to the miners. In turn, this made staking in the Ethereum blockchain more popular.
So, today, at 10:00 UTC, the value of all the ETH burned due to the update reached $400 million (~£293 million). A total of 124,865 ETH was withdrawn from circulation. About 200 ETH is burned every hour, which equals $643,000 (~£471,062).
Most of the ETH was burned on 27th August. This was caused by a sharp increase in transaction fees, which reached $38.3 (~£28). On that day, 11,176 ETH were withdrawn from circulation, which is around $35.8 million (~£26,2 million).
No more mining ETH
These changes are related to the new policy of the Ethereum developers. They specifically make mining unprofitable, as it is extremely harmful to the environment. According to the creators of this cryptocurrency, they will keep trying to displace mining.
Even though now all the profits from commissions are immediately burned, users can still manually pay miners to speed up their transactions.
With the release of Ethereum 2.0, the blockchain will completely get rid of miners, replacing them with proof-of-stake “validators”. Ethereum is expected to switch to staking by the end of this year.
Since Ethereum 2.0 will erase the proof-of-work mechanism, the way transactions are processed will also change. At the moment, to get the right to verify transactions, a miner must have a powerful computer. With the release of the new version of Ethereum, validators will be awarded the right to verify transactions if they work with large amounts of ETH. Such a system is supposed to make Ethereum 2.0 99.5% more environmentally friendly.
I am sure that crypto assets are a new type of economy. We are at the origins of the crypto revolution. Right now, it is worth studying what cryptocurrencies and the blockchain are in order to make the most of this knowledge and these skills in the future.