Cryptocurrency News

Doubts About MATIC Burning at 10x Current Adoption Levels Being Sustainable

Ethereum Improvement Protocols or EIPs are projects that bring solutions to the issues faced on the Ethereum blockchain. Despite being one of the most valuable crypto projects, Ethereum was infamous for the unregulated, often very expensive, gas fees. So, last August, the network rolled in a solution for these issues known as the London Hard Fork. This is an EIP 1559 solution that came as an answer to the problems that were pushing Ethereum down the graph. Although a more stable solution is still in the works, the EIP 1559 has given some positive push for the coin in the market.

Following this successful implementation of this protocol by Ethereum, many other projects have begun the talks about bringing it to their chain. Polygon joined the list just after months since the introduction of the protocol. It is reported that on the 18th of January, the EIP 1559 protocol went live on the mainnet of Polygon. Earlier, the protocol’s test runs on the Mumbai testnet were met with success. Now, Polygon has expanded its operations to the mainnet.

The protocol is known for bringing a better fee structure for the chain. The fee structure has been one of the biggest disadvantages of smart contract platforms. Especially for Ethereum with the emergence of the so-called ‘Ethereum Killers.’ Polygon, whose infrastructure closely resembles Ethereum, has implemented the very solution used by its predecessor. According to experts, this protocol would increase the visibility of fees in the Polygon blockchain. It must not be confused for reducing, as its help is limited only to feel estimation.

However, the important aspect of the protocol has to do with the deflationary measures of the crypto project. As the ERC-20 Token came with an unlimited supply of tokens, soon there were concerns about the tokens being unable to sustain themselves as a store of value in the future. Burning is a widely accepted deflationary measure used by popular coins. Recently, we have seen Shiba Inu burning nearly half of its circulation and gaining up in the market ladder. So, Polygon plans to burn 0.27% of its circulation every year in order to balance the increasing pressures of inflation.

Although Polygon is not unlimited, it currently has a total supply limit of 10 billion tokens. Around 7 billion of these tokens have already been minted, and the increasing supply needs to be regulated before the coin witnessed a free fall in the market. The implementation of the EIP 1559 protocol would help the chain to increase the burning speed by 10x. However, questions soon sprang up asking how the coin would react where there is a tenfold increase in the number of users. It is believed that the deflationary measures of the coin would help sustain it in the future. Click to get more details about Polygon’s future.

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John Franklin

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John Franklin has completed his MBA with specialization in finance. He has keen interest in finance news writing and leads our finance news team. He loves reading finance magazines.
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