Polygon has successfully implemented the Ethereum EIP-1559 upgrade, and MATIC tokens have officially started burning.
EIP-1559 replaces the first-price auction fee structure with a base fee that gets included in the next block. It also includes a priority fee to speed up processing. The base fee is burnt thereafter. 0.27% of all MATIC is estimated to be burnt each year under the upgrade.
According to Polygon’s announcement, the burning takes place in a two-step system whereby it starts on the Polygon network, and then completes on Ethereum. A public interface where users can monitor the burning process will be launched momentarily.
The upgrade won’t lower fees paid for transactions, as gas fees are determined by demand on the network, but they are expected to allow users to more accurately estimate costs and avoid overpaying.
“Users of decentralized apps (dApps) on Polygon, which already enjoy some of the lowest fees in the industry, will benefit from more predictable gas prices. The downsides are fewer MATIC tokens available because of the burn and a gas fee curve more similar to that of Ethereum. Developers will receive a boost by having all of their Ethereum tooling work seamlessly and face minimal adverse effects.”
According to Polygon, the upgrade will create deflationary pressure which will benefit both validators and delegators, whose rewards for processing transactions denominated in MATIC. However, validators will only be getting the priority fee in the future as opposed to the total amount of fees.
Since base fees increase automatically when the block is full, Polygon says that “the changes will result in fewer spam transactions and lead to less network congestion.”
A more technical overview of how the upgrade is being implemented can be read here.
Polygon is currently the 14th biggest cryptocurrency by market cap. Priced at $2.14 with a market capitalization of $14.6 billion, MATIC is up nearly 6200% over the last year, one of the best performing crypto assets in the top 100.