Ethereum Upgrade That Reduces ETH Supply Coming Soon
The Ethereum upgrade known as London hard fork is moving into final stages. The upgrade will include EIP-1559, which lowers the amount of ETH miners receive.
An up and coming upgrade to Ethereum, known as The London hard fork, is soon coming to the blockchain‘s test networks.
Ethereum Foundation announced today that the upgrade will go live on the Ropsten testnet around June 24, followed by Goerli on June 30, and Rinkeby on July 7.
The announcement stated:
“Once the upgrade has successfully been activated on these networks, a block will be set for the Ethereum mainnet.”
London is now finally ready to hit testnets ???
Next week, Ropsten, will upgrade, followed by Goerli & Rinkeby the weeks after.
Read this to find out how to prepare for the upgrade & expect another announcement when a mainnet block is chosen ?https://t.co/tq0Hq56MxV
The London upgrade will introduce five separate Ethereum Improvement Proposals (EIPs), which are changes to the blockchain’s code that must be broadly agreed upon by community members before they can be adopted.
Arguably the most significant change is EIP-1559, originally floated by Ethereum creator Vitalik Buterin, which alters how network fees work and how miners — i.e. the people running the software that processes all the transactions and creates new ETH — get compensated.
Currently, every time someone makes a transaction or interacts with a smart contract on Ethereum, they must decide on a fee, which is more or less a guessing game. To push through a transaction quickly, you can set a high fee, all but ensuring miners will include it in a block. If you lowball (intentionally or not), your transaction will likely wait until miners are less busy processing higher-paying transactions. Speed is important in several instances, including when trading upon Ethereum-based decentralized exchanges such as Uniswap, where token prices can swing rapidly; traders lose money if they wait.
To overcome this issue, EIP-1559 will double the capacity of blocks:
“This implies that most of the time, blocks will have an ‘extra’ 100% of their capacity that they can fill with transactions. So, as long as a transaction is sent with a fee higher than the BASE FEE and includes a tip for the miner, it will be included in the next handful of blocks.”
The added transparency is billed as an improvement to user experience. Some miners, however, claim that it’s deleterious to their experience. Under EIP-1559, that base fee is “burnt” (meaning taken out of circulation) instead of going to miners. The idea is to turn ETH, which doesn’t have a supply limit like Bitcoin, into a deflationary asset—or, at least, create some “deflationary pressure.”
Less Ethereum in circulation should theoretically be good for miners because it can increase demand and the spike up the trading price for Ethereum, which miners will still get as a reward every time they create a new block.
SparkPool, the biggest mining pool in Ethereum, isn’t persuaded and has come out against the change. In February, it wrote, “EIP 1559 burning tx fee is wealth redistribution, from miner to holder. That’s why so many people support it….But it is a tyranny of the majority in the name of better UX(in fact not). It is robbery.”
As long as London is only on testnets it’s just experimental “robbery.” But the upgrade is nearly here.
