One of the biggest problems with the Ethereum network is the very high transaction costs. In September 2020, over $ 500,000 of gas was paid for in one hour. On Uniswap the record was broken: $ 40,000 for one transaction (due to a typing error).
A first resolution to this problem could come from 𝕃𝕒𝕪𝕖𝕣𝟚.
As for 𝕃𝕒𝕪𝕖𝕣𝟚, we can distinguish:
✅ Independent blockchains: sidechain (Matic, Skale, Loom, xDai, etc)
✅ Chains parallel to the ETH mainnet (Layer2 has already been implemented in the liquidity pools of Loopring, on Synthetix, Aave and will arrive on Uniswap v3 and Compound)
When we carry out an operation in the ETH network, a smart contract is executed: the more complex these functions are, the more gas I will pay. The expensive functions performed in the smart contract will be diverted to Layer2, to then be transferred back to Layer1 (this process lowers the gas fees). What does this entail? Less network clog and higher speeds.
The only problem is that the final passage from Layer2 to Layer1 involves a wait of about a week (this problem can be solved if all protocols migrate directly to Layer2). To know more: Layer2 Coming Soon On Synthetix, Uniswap, Aave and Loopring
BERLIN UPDATE
On April 14, 2021, the "🅱🅴🆁🅻🅸🅽" update will be launched on the Ethereum mainnet. It will apply to the 12,244,000 block, which is likely to be mined on April 14th.
This update will be launched on the Ropsten testnet on March 10, while on March 17 it will arrive on Goerli and on the 24 on Rinkeby.
Ethereum nodes will need to be updated by miners to the new Berlin compatible version before April 7th.
This update introduces four EIPs (Ethereum Improvement Proposals) on the Ethereum mainnet:
1) EIP-2565 (reduces the cost of ModExp)
2) EIP-2929 (increases the cost of gas for some operations carried out the first time: SLOAD, * CALL, BALANCE, EXT * and SELFEDESTRUCT)
3) EIP-2718 (introduces a new type of transaction to enable more efficient media)
4) EIP-2930 (mitigates some of the increases in the cost of gas introduced by EIP-2929)
For users who do not own a node, this update does not involve any action. In general this is a network update to the protocol that creates new rules to improve the system. To know more: Ethereum Berlin Upgrade Announcement
LONDON UPDATE
The highly anticipated update to the Ethereum network, which could turn ETH into a deflationary asset, is expected for EIP "🅻🅾🅽🅳🅾🅽" in July (EIP-1559). The proposal will modify today's Ethereum commission "auction" system (the more I pay, the faster the transaction).
Basically, the base fee will be higher if the blockchain is congested and lower if it is less congested.
You can pay a base fee (canonical) and a base fee + 𝓹𝓻𝓮𝓶𝓲𝓾𝓶 (which will speed up the transaction. The premium goes to the miners).
Additionally, for each transaction, the network's base fee will be 𝙗𝙪𝙧𝙣𝙚𝙙🔥, potentially leading to a deflationary system for the network. According to a study of transactions on the network, if EIP-1559 had been active last year, 1 million ETH would have been burned (in 365 days). Research published by ETF Grayscale concluded that a deflationary mechanism will be a strong bullish factor for the price of Ether.
Obviously the miners are not happy with this update.
In recent months, they have been threatening a Hard Fork as some estimates place an economic loss of 50%.
WHY BE BULLISH WITH ETHEREUM?
There are good reasons to believe in Ethereum. Meanwhile, despite the gas fees are very high, ETH did well in this Bull Run.
What could push the price up?
1) Lowering of fees (𝕃𝕒𝕪𝕖𝕣𝟚, 🅱🅴🆁🅻🅸🅽 update)
2) Modification of the fee and burn🔥 system (🅻🅾🅽🅳🅾🅽 update)
3) Staking
4) Implementation of Proof Of Staking (2022)
What will happen? Will Ethereum Become Inflation-Controlled Like Bitcoin?
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