On Polygon, Ethereum EIP-1559 is upgraded to burn MATIC

According to the Polygon team’s predictions, MATIC supply is expected to become deflationary once fee burning begins.

On the layer-two scaling network Polygon, the Ethereum update that incorporated a partial network fee burning mechanism in August of last year has begun.

Ethereum’s EIP-1559 update, which was included in last summer’s London hard fork, has been a success in terms of gas price predictability and network fee reduction. The update has begun on Polygon’s layer-two scaling network in order to increase “fee visibility.” It became online at block 23850000 approximately an hour ago. Following its successful deployment on the Mumbai testnet, the Polygon team announced the update date on Jan. 17.

Polygon receives the same fee-burning mechanism with the EIP-1559 update, resulting in the destruction of MATIC tokens. Additionally, it eliminates the first-price auction technique of determining network fees, which results in more accurate cost estimates but does not result in lower gas costs. “The burning takes place in two stages, first on the Polygon network and concluding on the Ethereum network.”

As with Ethereum, the creators said that the supply of MATIC is anticipated to become deflationary, with 0.27 percent of the entire quantity burned each year. MATIC tokens are limited to a fixed quantity of 10 billion, with 6.8 billion presently in circulation.

“Deflationary pressure would benefit both validators and delegators, since their incentives for processing transactions are denominated in MATIC,” the statement said, adding that the update will help cut spam and network congestion.

Despite being a layer-two network, Polygon has had its own gas issue. Polygon gas prices increased significantly earlier this month, according to Dune Analytics, causing in some validators unable to submit blocks. The rise in demand was prompted by Sunflower Land, a DeFi yield farming game that rewarded early adopters before degens lost interest.

Since being live on Ethereum around six months ago, the update has resulted in the burn of 1.54 million ETH, according to the burn tracker. This equates to about $5 billion at current Ethereum pricing. Additionally, the tracker forecasts that when “the merge” occurs and proof-of-stake becomes the dominant consensus mechanism for the network, Ethereum issuance will become deflationary by -2.5 percent every year. According to CoinGecko, MATIC prices have fallen 9 percent on the day, to $2.22 at the time of writing.

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