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Polygon introduces Ethereum’s deflationary EIP-1559 upgrade– here are the details

Posted on by admin
14
Dec
  • Polygon has implemented Ethereum’s EIP-1559 upgrade to its Mumbai testnet following community demand.
  • Just like in Ethereum, the update brings predictable base charges, token burning, and reduced network congestion among other attributes.

Polygon (MATIC) has decided to follow in the footsteps of other deflationary networks like Ethereum and Binance Smart Chain (BSC). Per a Dec. 14 announcement, the Ethereum layer-two scaling solution will now implement EIP-1559 into its Mumbai testnet.

EIP-1559 (Ethereum Improvement Proposal) is an update that was part of Ethereum’s London hark fork conducted in August. The upgrade restricts transactions fees to a base fee, with an option for priority fees for faster transaction processing. This eliminates what Polygon calls the “first-price auction” in the fee calculation.

Related: Vitalik Buterin presents a “plausible roadmap” to Ethereum scalability before moving to ETH 2.0

Notably, these changes do not lower transaction fees since the base fees fluctuate with network congestion. The update, however, gives users better fee estimates and reduces gas fee inflation.

Polygon implements EIP-1559 on Mumbai testnet

Similar to Ethereum, EIP-1559 will also introduce base fee burning for Polygon. MATIC tokens have a supply cap of 10 billion. A burn would, therefore, create scarcity, which works positively to the value of the token.

The testnet implementation, Polygon notes, comes after extensive discussions with the Polygon community on its potential impact. EIP-1559 seems to have gained quite the number of devotees owing to the high demand it had on Polygon. This stems from the effect deflationary systems have had on Ethereum and BSC.

After extensive discussions with and input from the community, Polygon is taking steps to bring this much-requested upgrade to our network. It goes live on the Mumbai testnet on Dec. 14, at 8 a.m. UTC.

In November, Ethereum marked its first deflationary week where the number of tokens burned exceeded those mined. Similar weeks followed, and as November came to a close, the number of ETH burned topped one million. At around this time, Binance introduced BEP-95, which burns up to 10 percent of BNB utilized in transactional charges.

Read More: Binance implement Bruno upgrade and BEP-95 real-time token burning

Further details on EIP-1559 effects

Presumably, Polygon’s implementation of EIP-1559 will have an even greater impact on it than Ethereum. This is because MATIC has a supply cap while Ethereum’s supply is infinite. Polygon estimates that the burning feature will destroy 0.27 percent of the total MATIC supply annually.

DApp users and developers, like MATIC holders, will benefit from more predictable gas prices. Validators and delegators will benefit when MATIC rises, since their rewards are based on the token. Changes will also reduce spam transactions, and resultantly network congestion. Validators, however, will henceforth receive only the priority fee rather than the whole transaction fee. It is unclear when the deflationary mechanism will come to Polygon’s Mainnet.

The selling price of MATIC still exhibits correction amid broader market depression. At writing time, the token was trading at $1.82, down 6.4 percent in the day according to our data. MATIC has also shed about 20 percent value in the last week.

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