Polygon (MATIC) to implement EIP-1559 on its network, could push token price higher

Karthik Subramanian

Polygon, the Layer 2 scaling solution on Ethereum that has been making waves in recent times, has announced that it would be looking to implement the EIP-1559 proposal on its network following discussions and approval from the community.

polygon

Similar to Ethereum Proposal

This proposal was initially implemented in Ethereum in August and though it was suggested as a change to improve the visibility of fees for the users of the network, what caught the eye of the traders and the investors was the fact that it involved the burning of the existing ETH tokens at a specific rate every year which would mean that the supply would keep decreasing with time and with the demand remaining constant or increasing, this would mean that the price would likely go up in the long term. This was viewed as a ploy by the Ethereum team to artificially drive up the price of the token which would benefit the team and also the large investors as well.

A similar initiative is currently being implemented by the Polygon team on the testnet and it says that this mechanism would have a discrete base fee for transactions to be included for processing in the next block and a priority fee to push up the speed of the transaction. The base fee, which would depend on the congestion and traffic on the network at that time, would then be burned. The team has made it very clear that it would not serve to alter the gas fees in any manner and that this is just another way of making the gas fees as transparent and reliable as possible.

Deflationary Effect on MATIC

For the developers and users, this change would mean that the gas fees become more predictable which will help them to design their systems in a more reliable manner. In the long run, the team estimates that 0.27% of the tokens would be burned on an annual basis which will have a deflationary effect on the price of the MATIC token. This could help to push up the price of the token in the long run and this could encourage long-term investors to look into buying the token now to make use of this deflationary effect in due course of time.

Read this next

Retail FX

eToro users now can trade underlying Italian stocks

Israeli social trading and multi-asset brokerage company eToro has expanded its service offering and trading products by incorporating new markets, namely Italian stocks listed at underlying exchanges.

Digital Assets

BlackRock bets on crypto bank Silvergate despite drastic fall

BlackRock, the world’s largest asset manager, has increased its stake in Silvergate Bank, a crypto-friendly lender that counts major crypto exchanges like Coinbase and Kraken as clients.

Opinion

A viewpoint from Anatoly Crachilov, CEO and Founding Partner at Nickel Digital, on SEC regulation of the digital asset sector

The SEC’s latest episode comes across as more of a PR performance rather than an act of investor protection.

Digital Assets

Tether denies receiving any loans from Celsius, the opposite is true

World’s largest stablecoin issuer, Tether dismissed reports suggesting that it received a $2 billion loan from the bankrupt cryptocurrency lender Celsius.

Institutional FX

Cboe FX volume makes strong rebound in January

Cboe’s institutional spot FX platform today announced its trading volume for the month ending January 2023, which marks a mild rebound after a steep fall in December.

Uncategorized

XS.com appoints Exness alumni Mohamad Ibrahim as CEO

XS.com, the multi-regulated financial services provider, has appointed Mohamad Ibrahim as the group’s newest chief executive officer (CEO).

Technology

B2Broker Integrates Match-Trader Solution to Expands Its White Label Liquidity Offering

A global provider of technology and liquidity for the FX and cryptocurrency markets, B2Broker recently announced the extension of its white label liquidity offering by merging with Match-Trader.

Digital Assets

UK launches open consultation to regulate crypto exchanges, custody, and lending

The government’s proposed measures have been informed by recent market events – including the failure of FTX – which reinforce the case for effective regulation and sector engagement.

Institutional FX

ViewTrade celebrates record growth with launch of carrying broker services offering

“We have been at the center of the empowerment of the retail investor for decades, supplying the technology to facilitate cross-border access to U.S. markets. Our demonstrated ability to provide a full-service, end-to-end solution to a diverse global customer base continues to prove its value every day.”

<