More than $144 million of ether has been burned since major network upgrades hit ethereum last week

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More than $144 million of ether has been burned since major network upgrades hit ethereum last week
The ethereum network runs the ether cryptocurrency, the second-biggest after bitcoin. Dado Ruvic/Reuters
  • More than $140 million ether has been burned since a revamp of the ethereum fee system on August 5.
  • The EIP-1559 changes have excited many investors and helped push the ether price up 17%.
  • Yet the asset remains volatile, having lost half its value between May and June before rebounding.

More than $144 million worth of ether has been burned since an overhaul of the fee system on the ethereum network went live on August 5.

As of Sunday, over 45,799 ether had been burned, according to tracking website Watch the Burn, at a rate of around 3.15 tokens per minute. The total amount burned was worth over $144 million at Sunday's price of $3,163.

The ethereum upgrade, codenamed EIP-1559, came into force on August 5 and significantly changed how fees work on the network.

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It excited many investors because it introduced a "fee burn." Users now pay a base fee to have their transaction processed by miners, instead of the auction system that was formerly used.

Miners do not receive the base fee, otherwise they could artificially congest the network to keep the fee high. To solve this problem, it's burned instead.

Read more: How to mine ethereum: A 25-year-old who pays $42 a month in exchange for half an ether monthly explains how he does it - and an expert breaks down the effect of the blockchain's recent upgrade on miners

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The fee burn mechanism limits the growth of the amount of ether in circulation. As of Sunday morning US time, 89,543 ether had been issued while 45,799 had been burned, amounting to a net reduction of around 34%, according to Watch the Burn.

Investors have reacted well to the changes, with the ether price jumping from around $2,700 when EIP-1559 went live to more than $3,160 on Sunday. Excitement about the changes had also helped drive up the price before the changes came into force, contributing towards ether's 65% rise over the last 30 days.

"A massive upgrade for ethereum should prove to be very bullish for the cryptocurrency's long-term outlook," Edward Moya, senior market analyst at trading platform Oanda, said in a note. "The pace at how tokens are minted has been lowered, which will help make it a little bit more scarce."

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However, ether remains a wildly volatile asset whose future price movement is unpredictable. The token stood at more than $4,100 before losing more than half its value by late June.

Regulators have repeatedly warned that people who invest in cryptocurrencies are taking a big risk and should be prepared to lose all their money.

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