Cryptoharian – Ethereum has been struggling with low network fees in recent months, as interest in NFT and DeFi has waned.
Network usage has plummeted to such a low point that the network is now facing something its proponents say will not happen after implementing the EIP1559 mechanism.
According to data from Glassnode, gas costs on the Ethereum network are currently the same as at May 2020 levels, when the price of Ether (ETH) was still around US$200 per coin.
With gas costs hard to accept, the amount of Ether that has been burned in the burning mechanism after the implementation of EIP1559 has actually fallen to an all-time low.
This is because only 11 percent have been removed from circulation so far. This figure still seems difficult to make Ether a deflationary coin.
Given the high cost of gas in the network, Ether is now the most inflated coin since the implementation of the mechanism. Prior to the Merge update, investors expected the supply of ETH to continue to increase as network users slowed.
In addition, although the circulating supply is trying to decrease over time through the burning mechanism, the value of Ether also does not appear to have increased in the current Bearish market.
The increase in the price of Ether still tends to be triggered by developments in the DeFi and NFT sectors, so that burning looks more towards guarantees, rather than being the cause of price recovery.
Global sentiment also still plays an important role in Ether price growth, along with the crypto market which is still led by Bitcoin (BTC) price movements.
Even now, the Merge update is still being awaited as the network will switch consensus to Proof-of-Stake (PoS), from the previous Proof-of-Work (PoW), for a more environmentally and energy friendly network. The carbon footprint will be lost from Ether mining as new coins will be minted through the Staking method, brow locking crypto assets in the wallet to help the network. [St]