Ethereum Upgrade Introduces Fee-burning Mechanism to Polygon

8:11 am, Tue, 18 January 22

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Ethereum’s EIP-1559 has been quite the buzz, ever since it was launched last year. The difference that it has made in the crypto space is worth noticing, despite what some crypto enthusiasts had anticipated.

One of the features EIP-1559 upgrade introduced was a partial network fee burning mechanism. According to reports, this fee-burning mechanism has been launched on the Polygon network, which is highly likely to burn the MATIC tokens.

With the fee-burning mechanism, the MATIC tokens are also anticipated to become deflationary. Let’s find out more details.

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Ethereum’s Upgrade and its Impact on Polygon Network

The EIP-1559 has been a success in terms of network fee burning and gas price predictability. However, it is also set to improve the “fee visibility”, which is why it has been launched on the layer-two scaling Polygon network.

The Ethereum upgrade has introduced its fee-burning mechanism to Polygon, resulting in the burning of MATIC tokens. This upgrade also removes the first-price auction method for the calculation of network fees.

This does not reduce the gas prices but results in improved cost estimations.

The Polygon team made the announcement yesterday and stated:

The burning is a two-step affair that starts on the Polygon network and completes on the Ethereum network.”

According to the team of Polygon network, the supply of the MATIC tokens will become deflationary, in which case 0.27% of the total supply will be burned on an annual basis. At the moment, there is a fixed supply of MATIC tokens, which is up to 10 billion. Out of these 6.8 billion tokens are currently in circulation.

As per reports, network congestion and spam will also be significantly reduced, thanks to the upgrade. The Polygon team stated that the deflationary pressure will be beneficial for the delegators as well as the validators. This is because the reward for both parties for processing transactions is allocated in MATIC tokens.

The upgrade went live on the Ethereum network around six months ago. Since then, it has burned approximately 1.54 million ETH tokens.

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