London Hard Fork. Ethereum Fees Will Finally Stabilize
Ethereum continues to actively develop and release updates that allow the network to become better, cheaper, and more functional. On April 15, a hard fork of the network called Berlin was released, and in July 2021 a new one, London, is upcoming. In anticipation of the update, the demand for the coin is breaking all records and is approaching $3000.
Ethereum 2.0 is a more convenient and, most importantly, scalable blockchain, the algorithm of which will change from Proof-of-Work to Proof-of-Stake. After update’s releasing, the network will be supported by staking, not mining, which will positively affect the network bandwidth.
What are Berlin and London?
Berlin is the latest Ethereum hard fork that has four innovations to improve the network. Two of them (EIP-2565 and EIP-2929) changed the rules for commissions within the network, because up to this point they often exceeded the transfer amount. Another two (EIP-2930 and EIP-2718) set new conditions for transactions.
London will be an even more radical upgrade thanks to the EIP-1559 proposal developed by Vitalik Buterin in 2018. EIP-1559 changes the algorithms for paying miners: from the moment of the update, miners will receive payment only for including a transaction in a block. The rest of the “extra” commission or base fee, which is proportional to the size of the transaction and is subject to the strongest volatility, will be burned.
This system will be able to reduce the volatility of commissions, speed up the operation of the network (because miners will no longer load the network to increase their own earning), and will increase the size of blocks, and therefore the bandwidth of the blockchain. Also, as a result of lower fees, emissions will decrease in order to prepare the network for the launch of Ethereum 2.0.
Public response to EIP-1559
Of course, not all miners are happy about the prospect of a decrease in their income. Pools such as Sparkpool, BitFly, and Ethermine actively oppose the upgrade. It can lead to the huge problem as these large mining pools control over 50% of the network hashrate. Miners may start to act: generate empty blocks that will reduce the network bandwidth and even stop its operation.
Ethereum developers have their own position on this matter: if the protests of miners become too active and cease to be controlled, then the developers will have to quickly transfer the network to the Proof-of-Stake consensus algorithm.
At the same time, the third largest pool, F2Pool, published a post on its website in support of the update. Netizens are also ready for the update and take it positively.
Despite the background of all the upcoming updates, the Ethereum price is going up and, most likely, the growth will continue. After all, this particular network has tremendous potential thanks to its extensive smart contract system. Also Ethereum is the basis for most DeFi applications and is being tirelessly developed. And you can buy Ethereum right now in Chatex.