Crypto

Ethereum EIP-1559 update on Polygon to burn MATIC

Ethereum EIP-1559 update goes live on Polygon to burn MATIC

The supply of the MATIC cryptocurrency is likely to become deflationary once the fee burn begins, according to estimates from the Polygon team.

The Ethereum update that introduced a partial network fee burn mechanism in August last year was released on the Polygon scaling network.

The Ethereum Improvement Proposal (EIP) 1559 update was delivered with its London hard fork last summer and was successful in terms of gas price predictability and network fee consumption. The update has now been rolled out to Polygon in an attempt to improve “fee visibility”. It was launched at block 23,850,000.

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The Polygon team has announced the update date in Monda, following its successful implementation on the Mumbai testnet.

The EIP-1559 update introduces the same royalty consumption mechanism in Polygon, resulting in the destruction of MATIC tokens. It also eliminates the first-price auction method of calculating network fees, which leads to better cost estimates but does not lower gas prices.

“Burning is a two-step affair that starts on the Polygon network and ends on the Ethereum network. »

The team said that, like Ethereum, the supply of MATIC is likely to become deflationary with an estimated 0.27% of the total supply burned each year. There is a fixed supply of 10 billion MATIC tokens, with 6.8 billion currently in circulation.

“The deflationary pressure will benefit both validators and delegators as their rewards for processing transactions are denominated in MATIC,” he added before stating that the upgrade would also reduce spam and network congestion. .

Although it is a layer two network, Polygon has recently suffered its own gas crisis. Earlier this month, Polygon’s gas fees skyrocketed, according to Dune Analytics, preventing some validators from submitting blocks. The surge in demand was due to a decentralized financial return farming game called Sunflower Land, which rewarded early adopters before the degens lost interest.

Since going live on Ethereum about six months ago, the upgrade has caused 1.54 million Ether (ETH) to be burned so far, according to Ultrasound.money. At current ETH prices, this equates to roughly US$5 billion. The tracker also predicts that Ether issuance will become deflationary by -2.5% per year once “the merger” takes place and proof-of-stake becomes the primary consensus mechanism for the network.

By Martin Young, Cointelegraph

Martin has been writing about cybersecurity and infotech for two decades. He has previous trading experience, having covered forex and finance, and has been working in the blockchain and crypto industry since 2017.

The opinions expressed herein are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and trading move involves risk, you should do your own research when making a decision.

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