The Ethereum London hard fork is a highly anticipated update to the Ethereum blockchain that is now just within a few weeks away. This London update will be making significant changes to Ethereum's transaction fee system, which is much needed! This update will also be making preparations for the planned Ethereum 2.0 release by making adjustments to its consensus model as a whole. This update is also controversial due to the changes in these transaction fees and the mining of new Ethereum overall.
The London hard fork is introducing two new Ethereum Improvement Proposals (EIPs). The release of Ethereum 2.0 is planned for 2022, but this planned release date changes periodically and it's hard to set an exact time and date for it at the time of writing this article. Recently, it's been announced that a release date on the Ethereum mainnet will be August 2, 2021. Of course, we will just have to wait and see if this is concrete!
The most significant change will be to the transaction fees, including a new deflationary mechanism. Currently, Ethereum users enter a bid to pay for gas fees. Miners then prioritize transactions based on the fee added and use said fee as a reward for adding it to a block. With the London hard fork, each block will now have a fixed, associated fee instead. This is due to EIP-1559 and EIP-3238.
EIP-1559 is a proposed change to the way Ethereum users pay gas fees on the network. The average fee paid by Ethereum users currently has become far too costly for small transactions to be worth completing. This new proposed change calls for a pricing mechanism that will create a base fee for each block. When completing the transaction, the blockchain will automatically burn the fee, reducing the overall supply of Ethereum, creating a deflationary effect.
EIP-3238 is a proposal to delay the difficulty time bomb that's built into the Ethereum coding. The time bomb makes mining Ethereum increasingly more difficult over time. When the bomb is reached, the time it would take to mine a new block would take such a substantial amount of time to complete. Profitability would be scarce and transactions would be slower than ever before. Ethereum developers want to ensure that miners have no choice but to stop mining Ethereum and transition over to Ethereum 2.0 by its' release, so delaying the time bomb is necessary. This allows the network to incentivize current validators to transfer over to Ethereum 2.0's Proof-of-Stake (PoS) consensus model in time.
The Ethereum London Hard Fork is one of the most significant updates thus far on the Ethereum network. Previously, updates to the network were more behind the scenes with new systems set in place that we, the user, don't necessarily see when using 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. It's extremely hard to predict exactly what will happen when this update launches, so any guesses are pure speculation and only time will tell what will happen to Ethereum.
Who else is excited for the Ethereum London Hard Fork? Do you think it will attract more Ethereum users? Let's start a discussion in the comments!
Thanks so much for taking the time for reading my article today. I hope it gave you some information regarding the upcoming update to the Ethereum network! Of course, this is not financial advice and it's always recommended that you do your own research!
This article was originally posted on my Publish0x account found here: https://www.publish0x.com/keeping-a-close-eye-on-crypto/the-ethereum-london-hard-fork-xwwnqly