8 hour ago
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Ethereum Fusaka Upgrade Could Drive Significant ETH Burn, Analyst Says
An analyst predicts Ethereum's Fusaka upgrade on December 3 will significantly impact ETH by transforming Layer-2 (L2) networks into substantial ETH burners.
- The upgrade centers around EIP-7918, expected to restructure Ethereum’s fee economics.
- Currently, L2s benefit from zero base fees, but EIP-7918 will link L2 data costs to mainnet gas prices, enforcing a minimum fee.
- This change aims to make L2s pay their fair share in ETH, contributing to ETH burn through the EIP-1559 mechanism.
- As L2 throughput grows, it could become a major driver of ETH deflation, potentially burning millions of dollars worth of ETH over time.
- Kira suggests that corporate and institutional rollups like Coinbase and Robinhood will also burn ETH, further impacting supply dynamics.
The upgrade is compared to Ethereum's London hard fork, which introduced EIP-1559 in 2021, suggesting a similar bullish impact on the market. At the time of writing, ETH is trading at $3,022.
