Ethereum Improvement Proposal (EIP-1559) could pump Ether price through token burns

The long-awaited Ethereum network update EIP 1559 in conjunction with the London Hardfork is set to launch on August 4 according to the lead developer.

The software change will slow the growth of the Ether token supply, putting a smile on the faces of users and investors large and small. The Ethereum Improvement Proposal EIP-1559 proposes a fundamental alteration to the Ethereum network that might turn Ether, the network’s native coin, into a deflationary asset.

EIP 1559 reverses the order of a typical blockchain transaction in order to address a number of concerns with Ethereum’s user experience.

Gas fees, which were previously paid to miners for transactions to be included in a block, will now be provided to the network as a kind of “burn” called base fee, with miners receiving just an optional tip.

In an interview, Tim Beiko, the coordinator for the core Ethereum developers, revealed that user base fees now account for 25 percent to 75 percent of the gas fees paid to miners. Ether’s current supply increases at a rate of about 4% per year will be lowered after these coins are burned.

The burn fee is also set using an algorithm, making it easy for users to pay a reasonable amount. Ethereum is strengthening its place as a leading payment network with the EIP-1559 and London hard fork upgrade, the native token can become deflationary with the token supply growth set to be trimmed.