Ethereum a few hours before the most important update of the year, these are the changes that will take place
Less than 1 week after turning 6, the Ethereum network is preparing for a very important update called “Hard fork London”.
Ethereum as a whole is undergoing a major transition process: the algorithm is migrating from Proof of Work ("Proof of Work", used by Bitcoin) to Proof of Stake ("Proof of Stake"), which will increase its transaction capacity per second, and possibly reduce your highs gas rates.
In this process, the next big update is the "London Hard Fork", scheduled to take place between today (04) and tomorrow (5).
If you have ETH in your wallet, you don't have to do anything. The update is done automatically.
The name of the city, in this case London, is inspired by the cities where the web developer conferences were held.
The update is an improvement in the user experience and, among other improvements, includes EIP-1559, which changes the dynamics of the rates that users pay.
Better understand the hard fork London
Today, ETH is an inflationary currency, without limits. At each block validation (around 15 seconds), miners are rewarded with newly created coins and transaction fees paid by users.
The protocol update includes 5 Ethereum Enhancement Proposals (EIP), including EIP 1559 and EIP 3554, which aim to:
-Double the gas limit of the Ethereum network, which will increase the transaction capacity.
-Change the reward to miners.
On this last point, it is worth better understanding how it will be done. The new proposal is that the base rate has a "base" value, which will be automatically adjusted by the protocol, according to the network congestion. When the network exceeds the gas target per block, the base rate will increase slightly and when the capacity is below the target, it will decrease slightly.
Since these base rate changes will be restricted, the maximum difference in base rate from one block to another will be predictable.
An important aspect of this fee system is that miners will only be able to receive the block's priority and reward fee, while the base fee will always be burned (i.e. sent to a wallet that no one has access to).
Among other more technical factors, this burn will help balance Ethereum's inflation and significantly lessen the practice of tax manipulation by miners, who often do it to try and extract more fees from users.
Additionally, users will also be able to manually set the maximum transaction fee, which would help them limit their total costs per transaction.
The London hard fork is the starting point for a series of changes in the way miners operate on the Ethereum blockchain.
It is unlikely to make ETH a deflationary asset. This is not expected until around December 2021, when the network changes its consensus algorithm, leading to a large drop in the ETH issuance rate to around 0.4% per annum.
This 90% emission reduction is compared to 3 BTC halvings, which is where the “triple halving” comes in, as seen in the historical and projected ETH emission rate graph below (on the orange line between "1/1/2021" and "1/1/2022"). Only after this event is the network likely to become deflationary.
* The dates indicated in the table are estimates.
Apparently, London has benefited the price of ETH in recent weeks. In the last 7 days alone, the price of ETH has risen more than 18%, while that of BTC has fallen by around 0.5%.