Ethereum Berlin upgrade consists of such EIPs (Ethereum improvement proposals) that have the main objective of minimizing the processing prices. However, this might not end up as a long-term solution. Although Ether has maintained its position between the $1800 price point, the traders and investors of the altcoin's network have encountered a tremendous increase in the gas fees. Moreover, they have also faced a significant increase in network congestion problems. To put things into perspective, the price points of all Ethereum transactions and payments have seemed to be doubled since a couple of years back, when the DeFi bubble had reached its peak.
To overcome all these solutions, the world's second-largest digitized coin in terms of market cap, Ethereum, has upgraded to Berlin hard fork. This upgrade inculcates all those measures that are intended to push the gas fees in sync with the consumption costs. For the people who might not have heard the term gas fees before, it is used in calculating the payments on the Ethereum network. The traders and investors transfer a gas fee to the miners so that a transaction is present in the block. One thing that is imperative to keep in mind is that the computation costs should be entirely taken care of by the gas fee. The reason being that it provides the miners with an incentive to keep adding on transactions in the blockchain.
Why does this happen?
A few experts believe that Ethereum has reached its tipping point. They have stated that the developers of Ethereum have been forced to address the problems that they are being dealt with. These issues include the rising gas fees and the increment in network congestion. Other than that, the biggest issue it has is that its competition surpasses them. Despite Ethereum being on the top of the list of all digitized coins, complacency is never beneficial.
Even though certain are adamant that Ethereum has the potential of solving this issue, the crypto community is not willing to wait for the completion of Eth2. They do not want to wait for the transition into proof-of-stake. The main reason for this is because numerous networks are switching to broaden their operations and move towards alternative ecosystems.
Taking a look at its competition, it is observed that assets such as variations of Tether and USD coins give its user quick and fast transactions, that too at a very low cost as compared to the fee charged by the Ethereum network. Moreover, many EVM-compatible blockchains such as OKExChain, Binance Smart Chain, and others have been created which puts Ethereum’s supremacy in question. However, a decentralized lawyer of Ethereum states that as such attempts are being made, Ethereum's gas fees are bound to alleviate.
What is new?
There are four EIPs that are taken out to make sure that the price of the gas fee is set fairly.
- This upgrade includes such measures that will help in setting the price of the gas fee. Though this might sound complex, in simpler words it means that the fee charged for the transaction is going to get lower. Modular exponentiation is a cryptographic technique that is utilized by the miners by helping them in keeping the data of its user safe and secure every time a transaction is added to ETH's blockchain.
- The Berlin upgrade also poses solutions to increase the price of the gas fee for the state access opcodes. Yet again, this might sound like a challenging task, but this is fairly simple. To define opcodes, they are those commands that are executed by the Ethereum Virtual Machine each time a contract has been executed. The state is all the data that has been put forth on the network.
- Another upgrade that this includes is mitigating the risks of the traders to pay the high gas fee and lessen the contract breakages that are being caused by EIP-2929. How this works is that when this EIP is applied, the user has to pay a higher gas fee. However, the new proposal of EIP-2930 will allow the user to add an access list for the transactions being made. Hence, it will further lower down the gas fee. The users will be given a lower fee only if they have given their “access list” which provides the address and storage keys.
- It, furthermore, adds new transaction types to its framework. With the new feature of providing an "access list", it also needs a new transaction type to support it. This proposal will make the process much simpler and effective.
What does it mean for me as a hodler?
There are two possible sources of risks present while staking. The first one is being unable to comprehend the important strategies involved with securing assets while staking and contracting losses or theft. The second one is being unable to liquidate a position as the funds are locked up. Although the serenity event has proven to be a significant occasion for the Etherum, the experts have stated that it is an incremental scaling but its effects would not show in the shorter run because all the current developers have focused their workload towards Ethereum. However, long-run detrimental effects should be expected as it gives businesses and developers surety to keep working on ETH 2.0 due to greater scalability. In a nutshell, the Ethereum Berlin upgrade is more focused on miners than the hodlers. The hodlers only have to deal with the price explosion of assets.
One of the most awaited updates is working to provide greater speed invalidating and confirming transactions as well as decreasing network costs. This will be achieved when the demand for transactions is fairly distributed over the nodes.
Instructions that are to be performed on the associated network are formed to call a transaction and each type of these instructions has a certain fixed gas price attached to it. Since these gas costs are anticipated to be reduced, it will lead to a decrease in the transaction price. Through all these steps taken to cater to the fees problem, it is not yet clear how the Ethereum network will resolve the issue of adapting to increasing demand and rectify complications in a well-timed manner.