The Ethereum London Hark Fork is the latest upgrade to the Ethereum blockchain. This major upgrade on the blockchain that runs Ether, activated on 5th August 2021.
The reason why it is highly anticipated is because the introduction of EIP-1599 that is changing the Ethereum’s transaction fee system by replacing Ethereum’s auction-style fee market.
EIP-1599
It is a proposed change to the way Ethereum users pay gas fee on the network by changing calls for a pricing mechanism that will create a base fee for each block. Meaning users of the network will now have a fee market that will change how their transactions are prioritised and will add predictability to transaction fees instead of bidding.
And also, to create deflationary effect on Ethereum, part of the fee will be burnt once the transaction is complete in order to reduce the overall supply of Ether. This might be the most widely debated change that EIP-1599 implements as it affects miner rewards, causing them to receive reduced transaction fees.
Above all, there are four significant purposes for the proposal which include counterbalancing Ether’s increasing supply, preventing economic abstraction of Ether, reducing fee volatility and increasing fee market efficiency.
Other than the proposal of EIP-1599, the new upgrade will also delay the difficulty time bomb that is built into the Ethereum coding, making the mining of Ethereum increasingly more difficult over time. Hence profitability would be scare and transactions would be slower than before.
This upgrade is to encourage miners to stop mining and transition over to Ethereum 2.0 by its’ release. Ensuring the planned migration from a Proof of Work (PoW) model to a Proof of Stake (PoS) model later this year or early 2022 for a more secured network.
The announcement of Ethereum London Hard Fork itself has caused the jump on the price of Ethereum. With this update directly affecting how users interact with the platform, we should see a decrease in transaction fees and a higher valued price for Ethereum and Ethereum 2.0.
Although it is hard to predict what will happen but this upgrade has gave investors a confidence boost as it has proven that the network is still an actively developed project which refuses to stagnate and become obsolete.
