The Ethereum upgrade, which introduced a partial network fee-burning mechanism in August last year, was launched on the Polygon layer-two scaling network.
Ethereum’s EIP-1559 upgrade shipped with its London hard fork last summer and was a success in terms of gas price predictability and network fee reductions. The upgrade has now started on the Polygon layer-two scaling network to improve “fee visibility”. It went live on block about an hour ago 23850000.
The Polygon team announced the upgrade date on January 17 following its successful deployment on the Mumbai testnet.
The EIP-1559 upgrade introduces the same fee burning mechanism in Polygon, resulting in the destruction of MATIC tokens. In addition, the first-price auction method for calculating network charges will be eliminated, leading to better cost estimates but not lowering gas prices.
“Burning is a two-step affair, starting on the Polygon network and ending on the Ethereum network.”
The team explained that just like Ethereum, MATIC’s supply is likely to become deflationary as it is estimated that 0.27% of the total supply is burned each year. There is a fixed supply of 10 billion MATIC tokens, of which 6.8 billion are currently in circulation.
“The deflationary pressures will benefit both validators and delegators as their rewards are for processing transactions in MATIC,” it added, before explaining that the upgrade would also reduce spam and network congestion.
Although Polygon is a layer two network, it has recently suffered from its own gas crisis. Earlier this month, Polygon gas fees skyrocketed, according to Dune analytics resulting in some validators failing to submit blocks. The spike in demand was driven by a DeFi yield farming game called Sunflower Land that rewarded early adopters before Degen lost interest.
Related: This is how Polygon challenges the limits of Ethereum
Since going live on Ethereum around six months ago, the upgrade has burned 1.54 million ETH to date, according to Burn tracker. At current ETH prices, this amounts to around $5 billion. The tracker also predicts that Ethereum issuance will become deflationary by -2.5% per year once the “merge” takes place and proof-of-stake becomes the primary consensus mechanism for the network.
MATIC prices are down 9% on the day to $2.22 at the time of writing CoinGecko.
