Polygon Starts Burning MATIC Tokens After Successfully Implementing Ethereum (ETH) Update

The layer-2 scaling solution Polygon (MATIC) has successfully implemented a much-publicized Ethereum (ETH) update and is now burning native MATIC tokens.

Ethereum Improvement Proposal 1559 (EIP-1559) went live on the Polygon mainnet on Thursday, occurring on Block #23850000.

EIP-1559 first introduced a highly anticipated fee-burning mechanism into the Ethereum network in August, meaning that each time a transaction is sent, a percentage of the transaction fees is permanently removed from Ethereum’s circulating supply.

According to a new announcement, the upgrade will have a similar impact on the Polygon ecosystem. EIP-1559 establishes a discrete base fee for transactions on the blockchain and a “priority fee” to speed up a transaction’s processing time. The base fee gets burned.

Explains the Polygon team,

“Polygon’s MATIC has a fixed supply of 10 billion, so any reduction in the number of available tokens will have a deflationary effect.

We took Ethereum’s experience since the upgrade as the baseline to simulate the potential impact on MATIC’s total supply.”

The Polygon team’s completed analysis suggests annualized burn will represent 0.27% of the total MATIC supply.

MATIC is trading at $2.16 at time of writing, down more than 4.5% in the past 24 hours.

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Featured Image: Shutterstock/Salinee_Chot