Ryan Berckmans, an Ethereum developer that has been updating the community about the importance of Ethereum Improvement Proposals has recently shown that the much-awaited upgrades to the Ethereum network, EIP-1559, and proof-of-stake (PoS) consensus protocols are yet to price into ETH.
In a series of tweets on 20th March 2021, Berckmans stated that Ethereum is about to pay miners $18 billion this year, but next year, they will receive $0. He added that this money will rather be accrued for ETH holders after the upgrades.
Ryan Berckmans noted:
“Are the benefits of EIP-1559 and proof of stake already priced into ETH? imo, definitely not Ethereum is on track to pay miners $18b this year. Next year it’ll be $0. I see no evidence in the history of the crypto market or current activity to suggest this is already priced in.
“For example, yesterday, ethereum paid $51M to miners and accrued $0 to ETH holders. With EIP-1559 and proof of stake, we’d have paid $0 to miners and accrued $25.5M to ETH holders (in one day). Here’s how the ETH cash machine works.”
The Price of Ethereum (ETH) Is Below the Value of Cash It Produces
According to Berckmans in a thread of tweets on 1st March, Ethereum (ETH) is currently undervalued considering the value of the cash it produces.
He said ETH should currently worth around $2850 if not for the exorbitant fees that are paid to miners periodically:
“ETH the cash machine. Ethereum’s fees are worth ETH at $2850. The price of ETH is below the value of the cash it produces because ethereum’s fees go entirely to miners, who are on track to be paid 8% of all ETH this year.”
How EIP-1559 Benefits Ethereum Network
The Ethereum developer went further to explain how the much-awaited Ethereum Improvement Proposal (EIP) 1559 would transform the network.
Ryan Berckmans tweeted, “With EIP-1559, each transaction no longer picks a gas price. Instead, each transaction picks two new numbers, the “fee cap” and “tip”. Here’s a concept for how a wallet might auto-calc the fee cap and tip, and then show the user a fee choice of Slow, Average, or Fast, like today.”
With EIP-1559, each transaction no longer picks a gas price. Instead, each transaction picks two new numbers, the "fee cap" and "tip". Here's a concept for how a wallet might auto-calc the fee cap and tip, and then show the user a fee choice of Slow, Average, or Fast, like today pic.twitter.com/hg3RebGot9
— Ryan Berckmans (@RyanBerckmans) March 20, 2021