EIP-1559 + NFTs = 🔥
Growing NFT usage combined with EIP-1559 will lead to lots of burnt ETH!
Metaversal is a Bankless newsletter for weekly level-ups on NFTs, virtual worlds, & collectibles
Dear Bankless Nation,
EIP-1559 went live today 🔥
It’s a special moment for the Ethereum community, one that was +2 years in the making. Importantly, the EIP’s activation updates Ethereum’s fee market system with the goal of making it more predictable and more user-friendly.
Under this new fee system a portion of every Ethereum transaction gets burned, namely what’s called the base fee.
Over time this “burning” can make ETH deflationary and put upward pressure on the ETH price, which in turn would improve Ethereum’s security in general!
That’s why it’s so cool that top NFT projects are already proving to be some of the top ETH burners on the first day of EIP-1559. This bodes well for Ethereum, so let’s take a closer look at how things are shaping up right out of the gate 🪔
-WMP
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NFT Infernos, Everywhere!
A few minutes after 12:30 UTC today, Ethereum’s London upgrade activated and with that EIP-1559 kicked off! (Here’s an EIP-1559 refresher ft. Hasu).
At the time of this post’s writing it’s been ~12 hours since the first EIP-1559 ETH burnings began and things have been heating up accordingly, pun intended. Burn tracker website ultrasound.money is showing that nearly 3,000 ETH have already been burned in half a day.
Year-to-date, Ethereum’s issuance has averaged around 10,400 new ETH created per day. If we double the nearly 3k ETH burned thus far to ~6k ETH to estimate August 5th’s 24-hour burn rate, you can start to see how ETH’s already in striking distance of becoming deflationary.
That’s impressive in and of itself, but it’s also interesting to zoom in and see which projects have been the biggest ETH burners this early on. As you can see in the picture above, two of the top 5 ETH infernos so far have been leading NFT marketplace OpenSea (+300 ETH burned) and leading NFT game Axie Infinity (+100 ETH burned).
That these two projects in particular are fostering such incredible activity levels currently comes as no surprise to NFT watchers, as OpenSea is one of the highest-grossing online marketplaces in the world right now and Axie Infinity is presently on the cusp of 1 million daily active users (DAUs). From here, then, a few early takeaways to consider include:
The arrival of EIP-1559 further ossifies the symbiotic relationship between Ethereum and NFTs — Ethereum provides NFTs with programmable and essentially timeless infrastructure, and NFTs now service Ethereum’s security more directly.
Things are going to get a lot more interesting on the ETH 🔥 leaderboards as top NFT projects continue to grow and more NFT projects continue to arrive. Even in the case of Axie Infinity which has its own bespoke sidechain now, all roads (rather, plenty of fees) head back to Ethereum!
That the Ethereum community can collectively pull off an upgrade of this scale and importance suggests Ethereum and its NFT ecosystem are poised to last and thrive.
Action steps
📺 Watch “London Hardfork Livestream 🔥🔥🔥” by Bankless
📰 Read “How much will EIP-1559 burn?” in Bankless
👀 Check out BanklessDAO’s “Ultra Sound Bat” NFT collab — 25% of the proceeds will be donated to crypto advocacy organization Coin Center!
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
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OpenSea 3.6B GMV. According to this article (https://www.zdnet.com/article/aws-run-rate-hits-54-billion-annual-run-rate/) Amazon is 54B.
3.6/54 = 6.666%
Probably nothing.