Yesterday, I received the following message from my favorite crypto-lending platform, Hodlnaut. It informed us users that
In light of the upcoming Ethereum London upgrade, Hodlnaut will be temporarily halting all withdrawals for 3 hours during the Ethereum London fork. The Ethereum blockchain’s upgrade is scheduled for block 12,965,000 approximately around 6:45pm (GMT +8) on 5th August.
It has been widely known that one of Ethereum's current areas of growth is that it is based on the Proof-of-Work Protocol, which not only is a time-consuming process for transactions to be processed, but also incurs hefty gas fees. Hence, Vitalik Buterin and other developers are working around the clock to launch Ethereum 2.0 later this year (according to recent updates), which will be based on the Proof-of-Stake Protocol. This Ethereum London upgrade is a gradual shift towards Ethereum 2.0, a step forward towards Ethereum's dominance of the crypto world!
To understand the changes brought about by this Ethereum upgrade, I will like to use the interactive thinking tool (In the past...With the Ethereum London upgrade...) so that you can understand them easily. Here goes!
In the past, miners got rewarded with gas fees by validating transactions on the Ethereum blockchain. As activity on the blockchain surged due to the recent popularity of NFTs and other DeFi applications, these gas fees could amount to something quite exorbitant. With the Ethereum London upgrade, the Ethereum Improvement Proposal 1559 (EIP-1559) is incorporated, which aims to make fees more predictable and palatable for us users.
In the past, the circulating supply of ETH was not controlled. With the Ethereum London upgrade, the circulating supply of ETH will be reduced over time. It is hoped that the reduction of ETH in the blockchain will eventually lead to a rise in prices as there is less ETH available. This scarcity thus makes ETH a deflationary asset.
In the past, users paid a gas fee to the miner who validated the transaction whenever they wished to make a transaction on the Ethereum blockchain network. With the Ethereum London upgrade, users will now pay a simplified base fee that is determined automatically by their wallet. This base fee will be burned by the network upon usage. As such, some miners are not approving of the Ethereum Improvement Proposal because they are convinced that this reduction in mining will lead to a reduction in their income.