The “Flippening” — the idea that ETH will eventually overtake BTC as the leading crypto— has been at the forefront of the minds of most Ethereum enthusiasts. Any price movements from the 2 behemoths are instantly magnified and compared as a result.
ETH’s recent gains of as much as 10%, following the final testnet for the London Hard Fork have sparked many to speculate that ETH may be outperforming BTC and that it’s only a matter of time before the flippening.
The mainnet release of the London Hard Fork, being the main upcoming development for Ethereum, have left many to be excited and cautiously optimistic.
Set to go live on block 12,965,000 — around August 4, 2021, here’s are the key changes the London Hard Fork will bring about for the Ethereum blockchain:
What is the London Hard Fork and what does it entail?
Ethereum Network upgrades usually involve Ethereum Improvement Proposals or (EIPs) which can include changes in protocol specifications, contract standards and so on. Anybody can suggest EIPs but it is up to the community to decide whether it will be adopted in the end.
The preceding Berlin Hard Fork had 4 key EIPs aimed to improve high gas prices, minimise DoS (Denial of Service) cyber attacks and add more transaction types. For the London Hard Fork protocol update, it will include five — with the most notable being EIP 1559 and EIP 3554.
👉 Read more about the Berlin Hard Fork.
Here’s a summary of the 5 EIPs:
Gas Fee Structure
- EIP-1559
This aims to introduce a minimum fee to all on-chain transactions therefore minimise fee unpredictability. The fee mechanism also includes: part of the transaction fee to be burnt and an introduction of a maximum fee they are willing to send to the miner.
Historically, Ethereum transaction fees rely on an auction mechanism where higher bids (Gas prices) are chosen by miners to process first, which have led to inefficiency. This EIP is meant to solve this problem.
- EIP-3198
This helps to add an operational code that enables smart contracts to access the block’s base fee. As a companion to EIP 1559, this can help with submitting proofs for instances of fraud and trustless gas price derivatives.
Delay Transition for Proof of Stake
- EIP-3554
EIP-3554 delays the difficulty bomb, also known as the ice age, the mechanism that was introduced in Ethereum to “freeze” mining as the network transitions to Proof of Stake. The bomb has to be delayed to December 1st 2021, as the POS transition is currently not yet ready. This has already been done three times in the past hard forks namely: Metropolis, Constantinople and Muir Glacier.
General Improvements
- EIP-3529
The EIP 3529 reduces and removes previously proposed changes to refunds, whose benefits have proven to be far lower than anticipated and also resulted in unexpected harmful consequences. This allows the block to use up to twice the current gas limit.
This change will help offset some of the additional block size variance introduced by EIP-1559.
- EIP-3541
This EIP will make it impossible for new contracts starting with the 0xEF byte to be deployed. EIP-3541 is a simple change which lays the groundwork for broader Ethereum Virtual Machine (EVM) improvements.
Learn more about London Hard Fork.
Is EIP 1559 bad for miners?
The EIP 1559 protocol is a highly controversial one, as burning the fees will effectively decrease miner’s revenue. With estimates of the revenue drop at between 20%-35% it is no wonder that a large majority of Ethereum miners are against the proposal. However, despite the vehement by miners, the developers have not recoiled from going along with the update.
Along with the negative reception from Miner pools, EIP 1559 has also brought about the misconception that its implementation would reduce high fees on the network.
The proposal aims to make transaction fees less volatile by creating an algorithmic model to adjust with traffic automatically. EIP-1559 has no influence over whether gas fees are higher as this is a result of the network’s ability to handle traffic during peak periods.
What’s next after London?
The next hard fork is Shanghai and the tentative date of release remains unknown at the time of writing.
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