The Ethereum network conducted a partial network fee burning mechanism in August 2021. The objective of the upgrade was to make Ether deflationary. This upgrade has launched on Polygon, a layer two scaling solution based on Ethereum.
Ethereum’s EIP-1559 is part of the London hard fork upgrade, and so far, it has delivered the expected solutions on Ethereum by burning network fees and boosting gas price predictability.
Ethereum EIP-1559 upgrade goes live on Polygon
The Ethereum EIP-1559 upgrade is now live on the Polygon network, with the objective being to boost fee visibility. The upgrade went live at block 23850000.
The announcement from Polygon stated, “The burning is a two-step affair that starts on the Polygon network and completes on the Ethereum network. The Polygon team has created a public interface where users can monitor and become part of the burning process.”
The upgrade will bring the same fee burning mechanism to the Polygon network, thus reducing the supply of MATIC tokens. The upgrade will also eradicate the first-price auction strategy used in calculating network fees. This will lead to better cost estimations on the fees charged on the network.
The Polygon team further stated that the supply of MATIC would become deflationary with this upgrade. 0.27% of the entire supply will be burnt annually. The total supply of MATIC tokens is capped at 10 billion, with 6.8 billion being the circulating supply.
The Polygon team noted that the upgrade would carry benefits such as reducing spam and getting rid of network congestion. ”Deflationary pressure will benefit both validators and delegators because their rewards for processing transactions are denominated in MATIC.”
The EIP-1559 went live on Ethereum last summer, and so far, 1.54 million Ether tokens have been burnt. The upgrade is part of the journey towards ETH.20, with burn tracker predicting the issuance of ETH tokens will be deflationary by 2.5% after the merge is complete and Ethereum transitions to a proof-of-stake consensus.
Gas fees on MATIC
Polygon is a layer two network, but recently, it has suffered from increased gas fees. Earlier this month, Dune Analytics noted that the gas fees on the network increased to notable highs. This was caused by some validators failing to submit blocks.
News of this upgrade has not aided in MATIC’s price recovery. The token has dipped by around 8.4%, and at the time of writing, it was trading at around $2.20.
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