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MATIC token burning: Ethereum update EIP-1559 arrived on Polygon

 


The MATIC offering will become deflationary once fee burning begins, the Polygon team believes.


Last August, there was an Ethereum upgrade that introduced a partial network fee burn mechanism. This has now arrived on the layer two network Polygon.


Launched with the London hard fork last summer, the Ethereum Improvement Proposal (EIP) 1559 was a success in terms of gas price predictability. It also implemented mechanisms for burning network fees. The upgrade has now started on Polygon for better "fee visibility". The update went into effect at block number 23,850,000 .


The Polygon team announced the date of the upgrade to Monda after successfully deploying it on the Mumbai testnet.


Now, with the EIP-1559, the same fee burning mechanism is coming to Polygon. As a result, MATIC tokens will also be destroyed. Also, this method eliminates the first-price auction used to calculate network charges, which results in better cost estimates but does not reduce gas prices.


"The burning happens in two stages. It starts on the Polygon network and finishes on the Ethereum network."

The team stated that the MATIC supply, like Ethereum, is likely to become deflationary. It is estimated that 0.27 percent of the total supply is incinerated every year. There is a fixed supply of 10 billion MATIC tokens, of which 6.8 billion are currently in circulation.


"Deflationary pressures will benefit both validators and delegators as their rewards are paid for processing transactions in MATIC," the company added. It also said the upgrade would also reduce spam and network congestion.


Although Polygon is a layer two network, it has also struggled with gas rates lately. Earlier this month, Polygon gas fees have skyrocketed , according to Dune Analytics . This resulted in some validators being unable to submit blocks. The sharp increase in demand is due to the DeFi yield farming game called Sunflower Land, which rewarded early adopters. Shortly thereafter, the profiteers lost interest.


According to Ultrasound.money , 1.54 million Ether ( ETH ) have been burned since the upgrade to Ethereum around six months ago . At current ETH prices, that equates to about $5 billion. The tracker also predicts that 2.5 percent less supply will be spent per year once "the merge" takes place and proof-of-stake becomes the primary consensus mechanism for the network.


According to CoinGecko , MATIC is down 9 percent on the day at $2.22.

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