Have you noticed all the talk surrounding Ethereum today? Well, this is due to the Ethereum London upgrade launching on the Ropsten network. This implements the highly anticipated EIP-1559 modification that alters the Ethereum network transaction fee calculation mechanism.
EIP-1559 is a proposed change to the way Ethereum users pay gas fees on the network. The average fee paid by Ethereum users currently has become far too costly for small transactions to be worth completing. This new proposed change calls for a pricing mechanism that will create a base fee for each block. When completing the transaction, the blockchain will automatically burn the fee, reducing the overall supply of Ethereum, creating a deflationary effect. Let's take a closer look into this upgrade that happened today.
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Burning Ethereum... are you mad?! Nope! Check out what has been burned here. It's pretty mindboggling with both the amount of Ethereum already burned within 24 hours and the total value of it as well. The new mechanism calls for a base fee rather than a bid on the highest fee paid out to the miners. Users are allowed to add a tip to the transaction to help the speed of completion, but this doesn't cause a monumental effect on times.
The base fee is set to dynamically change depending on how full the block is at the time of the transaction. This allows decentralized applications (DApps), wallets, and protocols to automatically set lower and more accurate gas fees. Not only that, but the base fee is also burned, adding that deflationary effect mentioned above. This should also lower the cost of transaction fees over time, meaning users will overpay for gas less frequently.
The next phase of the London hard fork rollouts are set to deploy on the Goerli testnet, scheduled for June 30, 2021. Soon after, it will be launched on the Rinkeby testnet on July 7, 2021. Finally, the upgrade will be rolled out entirely on the Ethereum mainnet towards the end of July 2021. If you would like to read more about the Ethereum London hard fork, I suggest you check out my other article here where I go more in-depth about the subject. These upgrades to the Ethereum network and the implementation of Ethereum 2.0 will be a massive change to the way we see the ecosystem operate each day moving into the future!
Have you already seen a difference in your ETH transaction fees?
Let us know in the comments down below!
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