The highly anticipated upgrade from Ethereum (ETH) London is here, bringing with it the overhaul of the network’s monetary system through the Ethereum Improvement Proposal (EIP) 1559.
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The price of the second crypto asset by market capitalization increased in the week before this upgrade, increasing 21% during that time and 3% in one day. At 16:19 UTC it was trading at $ 2,782.
It hit a record high of nearly $ 4,357 (per coin checko) in May and has since fallen 37%.
Some major exchanges decided to suspend ETH and ERC-20 token deposits and withdrawals during the upgrade and resume later as no major issues were recorded after the hard fork. Binance said it is doing this to reduce the trading risks caused by price volatility and to keep user funds safe during the fork.
Imagine Apple stocks being burned
The London upgrade follows the Berlin upgrade in April and includes five EIPs.
The most talked about in the last few months is EIP-1559, and it is accompanied by EIP-3198 and EIP-3529. Two other suggestions included are EIP-3541 and EIP-3554, the first of which is to lay the groundwork for more extensive improvements to the Ethereum Virtual Machine (EVM), and the second to get the difficulty bomb, also known as the Ice Age, on December 1st to move.
As for EIP-1559 itself, as more fully reported, it brings an automatic token burn mechanism to every transaction and is intended to help improve the fee market.
It should enable a better estimate of the transaction fees and a more reliable inclusion of transactions as well as at least slightly lower the inflation rate of the ETH, among other things by burning transaction fees.
However, it won’t lower gas prices in the long run, nor will it make ETH deflationary by default.
Ross Middleton, CFO of the DeversiFi exchange, called the upgrade “a big day for the Ethereum cryptocurrency ecosystem,” saying that now any transaction, purchase or loan of non-fungible tokens (NFT) on the Ethereum network will lead to it is that ETH is burned out of existence.
“The equivalent would be Apple Inc burning AAPL stock every time someone buys something from the Apple App Store or makes an in-app purchase,” said Middleton.
During the Bankless livestream, a number of key people in the Ethereum ecosystem confirmed that the upgrade went live and continued to monitor various aspects for possible issues.
“Everything is burning at ETH as expected,” said Ethereum developer Trenton van Epps.
After only 10 minutes, ETH 3 was almost burned, the participants found. About 4 minutes later it was more than ETH 8.
Hasu argued that the current burn rate won’t last forever.
Patience and warnings
Many of the changes that this EIP and upgrade in general will bring will not be apparent overnight. Additionally, a number of industry insiders, such as MyCrypto CEO Talyor Monahan, are warning users to lower their expectations and be aware that problems can arise with the fork too. For example, problems arose during the previous Berlin upgrade.
Others have found that a variety of problems and errors can arise, but also that this particular EIP has been extensively tested.
During today’s livestream, software developer and engineer Hudson Jameson noted that people would know something went wrong as the key few were slowly “leaking things out on Twitter” without panic.
Participants also noted that there would be some impact on the hashrate, but that it is currently difficult to say exactly in what way.
EIP-1559 contributors described the EIP as “an incredibly complex change, the largest to date in the Ethereum mainnet, that will improve both the user experience and the economics of the entire network.” They added that “the engineers, researchers and other contributors will not directly take advantage of the ultimate utility for the network.”
At the time of writing on Thursday, 77% of customers are ready to upgrade according to ethernodes.org data.
To be compatible with the London upgrade, Node Operators must upgrade the client version they are running.
“If you are using an Ethereum client that is not updated to the latest version […], your client will be synchronized with the pre-fork blockchain after the upgrade. You will get stuck in an incompatible chain that follows the old rules and you will not be able to send Ether or operate on the Ethereum network after the upgrade, “wrote Ethereum Foundation Community Manager Tim Beiko .
Beiko told Cryptonews.com that “if people haven’t updated their nodes, the next time they need to use them.” It is possible that some nodes have not been updated and “they will cease to be valid peers on the network until they do”. It happens because people forget or miss the announcement, etc.
“It’s also worth noting that these crawler websites don’t have a full view of the network, so the numbers can be misleading. They’re probably about right, but I wouldn’t give too much weight to the specific percentages, ”noted Beiko.
As for the wallets, Eric Conner, co-author of EIP-1559, said that, for example, MetaMask can still work if the new transaction fee path is not supported. “Heritage [transactions] are still supported, not all wallets are flipped at once, “he added.
However, MetaMask has confirmed that support for the upgrade will be provided.
Regarding the much-discussed priority fee / tip, Beiko said that users “want to pay miners a priority high enough that if they include their transaction it will be net profitable for them,” and provides additional math in the thread.
Hasu also tweeted answers to two important questions that were asked in the Cryptoverse.
If wallets are not ready for EIP-1559 from the start, the old transaction format will remain compatible and the gas price will be converted to the new format (maximum basic fee + tip that the user is willing to pay). “Be careful not to pay too much [transactions] as a result, ”he said.
Also, all transactions, including legacy transactions, will be handled according to the new format, so the miners will have to burn ETH to pick them up.
In the meantime, this is just an upgrade in the long run that handles the second iteration of Ethereum, ETH 2.0. According to Joe Lubin, CEO of Consensys and co-founder of Ethereum, this iteration will be “a paradigm shift”.
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(Updated at 13:39 UTC: updates throughout text. Updated at 14:51 UTC with the latest market data. Updated at 16:20 UTC with stock market information, the latest market data, and additional comments.)