The London hard fork launched on the Ethereum mainnet in block 12,965,000. The update should address scalability, security, and resiliency issues by launching improvement proposals. Also, in the future, the blockchain plans to switch from the Proof of Work consensus algorithm to Proof of Stake. At the time of this writin; the value of the coin is $ 2,613 with a market capitalization of $ 304,100,415,988. The daily growth of the coin rate was 4.6%.
Ethereum London brought five major changes to the network. These include EIP-1559 (change in fees market for the ETH 1.0 chain); EIP-3198 (opcode BASEFEE); EIP-3529 (abbreviated refunds); EIP-3541 (prohibit 0xEF from deploying new code starting with a byte); and EIP -3554 (delays the difficulty bomb). The most burning topic for the Ethereum community was the improvement of EIP-1559, which provides for the introduction of a new pricing system for transactions on the blockchain. However, will the update be successful?
EIP-1559 will work as follows: about 13,000 new ETH, which issued daily to miners as payment for payments, divided into three parts. The part that can be considered as the base transaction fee is now withdrawn from circulation by burning the token. The base commission rate after the hard fork will be calculated automatically: after the block filled by 50%, the base commission increases; otherwise, it decreases. The limit of this fluctuation set at 12.5%: the baseboard will add 12.5% when the block filled to 100%, which is almost unrealistic. Otherwise, if there are no transactions in the block, its base commission reduced by 12.5%. This reduces the amount of ETH and miners will receive less profit in the future. In turn, transactions for users using Ethereum decentralized applications should become more predictable in terms of price.
Deflationary effect of EIP-1559 in Ethereum London hardfork
Even before the launch of the London update to the mainnet, many miners disliked the EIP-1559. This blockchain improvement proposal will result in a loss of profit for many users who mine ETH. Poolin and Bitfly were the leading Ethereum (ETH) mining organizations that launched a promotional campaign to prevent EIP-1559 from being hardforked. At the same time, F2Pool was the largest mining pool that supported the upgrade. In anticipation of the update, it became popular to compare the Ethereum London hardfork and the Bitcoin halving. However, cryptocurrency analysts believe that miners should benefit from the upgrade over the medium term. Such assumptions are due to the fact that the update should increase the use of the Ethereum network and its value, respectively, and the coins of the miners will also receive more value.
However, the Ethereum London hard fork has just been launched. It remains to be seen if EIP-1559 will have such a positive impact on the coin’s price. Even if it does affect the value of ETH, it may take some time. Also, after the London fork, Vitalik Buterin’s network will receive a number of updates, which should lead to the full formation of the Ethereum 2.0 blockchain.