Ethereum had a very busy year in 2021. From the boom in NFTs to the growing mass adoption of cryptocurrencies in general, Ethereum is a promising and exciting space to be in right now. Perhaps the most significant thing to happen to Ethereum in 2021 is the London hard fork, and more specifically, the adoption of the Ethereum Investment Proposal (EIP) 1559. EIP 1551 will help manage gas fees, introduce a deflationary aspect to Ethereum (EHT), and, with other upgrades to ETH, may combine to increase the value of Ethereum.
Under EIP 1559, the Ethereum blockchain will handle gas fees through an automates system. This will make the protocol easier and less intimidating to use, particularly as Crypto becomes more and more mainstream. The market has grown numb to high gas fees on the Ethereum chain and many users have been looking for alternatives, including layer 2 solutions and alternate chains to transact upon. EIP 1559 will simplify gas fees for most users and may even reduce them.
The EIP 1559 proposal also introduces something new- under EIP 1559 some ETH will be burned when used as a fee in a transaction. This removes ETH from the chain and reduced the amount of ETH in circulation—a deflationary measure. As the amount of ETH in circulation declines, the value of remaining ETH should increase.
Other upgrades to the Ethereum protocol coming down the line will enhance the impact of EIP 1559 and taken together, they may lead to an increase in value of ETH. In particular, the move from a Proof of Work protocol to a Proof of Stake protocol will reduce some of the barriers to entry in ETH acquisition and make the protocol more environmentally friendly. The timing of this transition looks more and more like it will not be in 2021, however.
The Ethereum protocol is going through a number of significant changes, but in 2021, arguably the most significant is the EIP 1551 proposal. One thing seems pretty clear, Ethereum is not going anywhere anytime soon, and the upcoming proposals and changes are going to make Ethereum more mainstream.
