In this post, I talked about the London hard fork, the latest upgrade on the Ethereum blockchain.
While investors anticipate the launch of ETH 2.0 with greater possibilities, the network adopted a hard fork to help speed things up.
Keep reading to know the details of the fork and how it affects you.
Post Summary
- What Is The London Hard Fork?
- The 5 Proposals Of The London Hard Fork
- Implications Of The London Hard Fork
- Is The London Hard Fork Good For Ethereum’s Future?
- Conclusion
Click on any item above to read its details immediately.
1. What Is The London Hard Fork?
The London Hard Fork is a set of five Ethereum improvement proposals (EIPs), which went live on August 5, 2021 (at block 12,965,000).
This means that the Ethereum network has been updated based on 5 proposals.
It is a hard fork because it represents a permanent change on the blockchain.
And ‘London’ was added to the name because that’s the city where the Ethereum community held the last international conference.
Honestly, the London hard fork couldn’t have come at a better time.
I say so because the Ethereum blockchain has an age-long problem with scaling.
The traffic in processing transactions and the exorbitant gas fees are overwhelming.
With this upgrade, investors hope to pay lower gas fees and enjoy faster transactions.
The five proposals are EIP-1559, EIP-3198, EIP-3529, EIP-3541, and EIP-3554.
I threw more light on each one in the next section.
Keep reading!
2. The 5 Proposals Of The London Hard Fork
EIP-1559
This is the most popular of all the proposals because it refurbished the fee and payment system of the network.
It features a fixed-per-block network fee that is burned.
Also, it expands or contracts block sizes to deal with temporary congestion. Wow!
Let me break that down…
Initially, Ethereum users would bid on a mining price when sending a transaction.
This bidding system made transaction fees very volatile.
But with EIP-1559, fees are automated and algorithmically calculated depending on network congestion.
Again, miners received transaction fees as a reward when they validate a block.
EIP-1559 changed that too. Miners will not receive these fees anymore because they will be burned. Oops!
Not all the transaction fees are burned though.
A part of a single fee is burned and the rest is given to the miner that validates the transaction. Ooh…
Furthermore, EIP-1559 allows users to set the maximum amount they will pay for the fees.
And where the network is favorable, leftover fees will be refunded to the transaction sender. Cool!
Additionally, EIP-1559 enables block sizes to double the previous size limit to account for network congestion.
Now, blocks are adjustable depending on the degree of network congestion. Great!
EIP-3198
The second proposal creates trustless gas price derivatives by granting smart contracts access to a block’s base fee.
Therefore, developers and users will not pay more than they ought to.
EIP-3529
This proposal also improves the fees structure.
It allows blocks to use twice the previous gas limit.
*Gas limit is the maximum price a cryptocurrency user is willing to pay when sending a transaction, or performing a smart contract function, in the Ethereum blockchain.
EIP-3541
EIP-3541 helped facilitate the transition to the hard fork.
It prevented unvalidated contracts from being recognized.
EIP-3554
The major role of EIP-3554 is to sustain the ethereum network until it transitions to the proposed Proof of Stake mechanism.
Amazing!
So, where do these improvements leave us?
Find out in the next section.
3. Implications Of The London Hard Fork
a. Stable and low fees
Users will no longer gamble or try to bid high for their transactions to be processed before others.
Rather the network will automatically state a base fee depending on the condition of the system.
Therefore, gas fees will be lower and more stable.
b. Higher value
The burning of some part of the transaction fees will reduce the amount of ETH in circulation.
Theoretically, this will increase the demand for the coin and boost its price.
Thus, you can expect more value for your asset. Yay!
c. Miners to validators
Remember what we discussed about EIP-3554.
It is holding the network till it transitions into a Proof of Stake blockchain.
Once the transition happens, there will not be a need for miners.
This hard fork is an eye-opener for miners to update their nodes.
That way, they can serve as validators when ETH 2.0 launches.
Moreover, the effect of EIP-1559 also means that the revenue of miners at the moment has dropped drastically.
Looking on the bright side, the value of the little rewards will be worthwhile since ETH is expecting a boost in price. 😉
So, is the London hard fork a good move?
Read the next section to know what I think.
4. Is The London Hard Fork Good For Ethereum’s Future?
I believe it is especially on the value of ETH.
Barely 24 hours after the upgrade, the coin’s price went up by 3.9%.
Secondly, users will have less to worry about unpredictable gas fees.
Everything is happening in the open now, no more blind bidding to override other users.
Interestingly, experts predict that transaction fees may reduce by up to 20% in the long run.
Furthermore, the network may experience the exit of many miners with this upgrade.
Though miners are the most crucial part of the network, they would be extinct with the launch of ETH 2.0 anyway.
Nevertheless, a reasonable number of departures could mean that ETH mining becomes more profitable for those who remain. Amazing!
Gratefully, investors do not need to make any changes.
Theirs is to sit back, relax, and enjoy the new Ethereum. 😜
Heads up!!
You can also join our Telegram community at https://t.me/ctmastery.
5. Conclusion
We have now come to the end of our discussion on the London hard fork.
It is a welcome development as there will be more transparency around gas fees.
Also, ETH may experience consistent price spikes. Superb!
I hope reading this article was worth your time.
Over to you; what do you think of the hard fork?
Have you experienced faster transactions on the Ethereum blockchain since August 2021?
Tell me in the comments section right now.
Please share this post on your way out. Thank you!
0 Comments