Ethereum has come so far already. The project started only five years ago has continued to record tremendous success in the market. A project, which despite its relatively young age, has managed to clinch the number 2 spot in the market. Crypto investors have all, at some point, heard about the Ethereum London Hard Fork. But not everyone can confidently say they know what it is.
We at Bitcoinist are dedicated to keeping you abreast of things going on in the market. So to stay true to form, here’s what you need to know about the launch happening today. The London Hard Fork which is scheduled for today will introduce significant upgrades to the Ethereum network.
EIP-1559 is part of a larger master plan to completely overhaul the current Ethereum network. Moving it from the current proof of work mechanism to proof of stake. But the whole plan is arranged to happen in stages. And each stage affects a different part of the network. EIP-1559 is the part that improves the fee structure of the Ethereum network.
Lower Network Fees With EIP-1559
With high traffic congestion comes higher fees in the Ethereum network. And with special releases like the Stoner Cats NFTs, fees on the network tend to shoot up. This is where EIP-1559 comes into the picture. This change in the fee structure will also lead to a change in the network’s monetary policy.
The launch of EIP-1559 will help users to make gas prices “securely measurable.” EIP-1559 will effectively introduce a base fee for all transactions sent by the users. The fee will be set by the wallet from which it is sent. And if a user desires their transaction to be added to a block quickly, they can pay a “tip” to the miner for this,
Base fees generated by wallets do not go to miners, however. They’re instead burned by the network. Which effectively removes that ETH from existence. Leading to less ETH being in circulation. This, hopefully, will make the nature of Ethereum deflationary over the long term.
The Move To Ethereum 2.0
As mentioned earlier, this is just another building block in the move to Ethereum 2.0. The scheduled upgrade to ETH 2.0 will see the energy usage of the network cut down by 99.5%. This is because the network will use validators who stake their ETH in order to run their own nodes. Instead of the power-consuming proof of work network which requires solving complex mathematical equations.
ETH 2.0 will enable faster and more efficient transactions on the network. The introduction of the Shard Chains will increase the ability of the network to scale. And also increase the network capacity of the Ethereum network.
ETH 2.0 is set to launch in 2022, with the addition of the Shard Chains as the final step. Ethereum EIP-1559, also known as the London Hard Fork, is currently live as of an hour ago. Watch the burn here.