Many Ethereum specialists believe that the digital asset still has a positive outlook and will continue to rise in the nearest future. However, it is important to point out that politics and technicalities are some of the hurdles that EIP-1559 has to face before its implementation. Eth still ranks second among all cryptocurrencies in terms of market capitalization.
Not long ago, Grayscale published a prediction of EIP 155O catalyzing Ether’s rise in value. According to some Ethereum analysts who granted an interview with Decrypt, Ethereum has the potential to continue its rally. However, the crypto asset is being hindered by technicalities and miners’ agitations that need to be resolved for the EIP 1559 to be executed.
Ethereum to Burn 1-4% of Its Value Every Year
As for the Ethereum upgrade, the transaction fee will be used to purchase Ethereum before burning it to curtail the supply of Ethereum on the market. According to some analysts, this is synonymous with making a profit and buying back its stocks. If a considerable amount of Ethereum is burnt, it will inevitably lead to a rise in the asset price.
This will eventually cause the price to rise owing to the limited supply. The analyst noted that every year, Ethereum will burn about 4 percent of its market capitalization of $200 billion. He added that the fact that you support Bitcoin’s capitalization at 20 million tokens should be the same reason you must support Ethereum’s decrease in supply.
There will be a decrease in volatility if EIP-1559 is introduced. Besides, going on with the project will attract some costs used to process Eth transactions, replacing the present one whose fees are too much to bear for most users. Some stakeholders are, however, hopeful that charging miners additional costs will likely prevent them from extorting users by demanding too much money from them, thereby causing volatility in fees. Users will now be happy that they won’t have to cough up a huge amount of money as transaction fees. They will likely pay $20 maximum for each transaction.
Ethereum to Automatically Generate BASEFEE
One of the modifications is that the two parties involved in buying and selling will no longer set transaction fees. Instead, the fee’s generation will be automated with BASEFEE, based on the program’s level. A congested network will attract high fees, while a silent network will attract small fees. Often, some users tip miners some extra money for smooth processing of transactions. However, this is not always the case. The money generated from the BASEFEE will be used for the purchase and burning of ETH.
The BASEFEE opcode is among the most exciting characteristics of EIP-1559. This code enables the estimation of congestion by smart contracts by comparing past behavior of basefee and modifying the features. Meanwhile, Tim Oglivie, an Ethereum expert, is not convinced that the program will put an end to the enormous transaction costs.
However, he believes that financial experts will evaluate Ethereum accurately to ensure that miners don’t overly charge users huge fees that could chase away investors from the system. Another Ethereum expert, Eric Wall, also agreed to the bullish outlook of Ethereum. He asserts that such proposal is among the best Ethereum would have.