Ethereum London Hard Fork: EIP 1559 Goes Into Effect on August 4th

Spearheaded by Ethereum developer Tim Beiko, Ethereum London is scheduled to release the Ethereum Improvement Program (EIP) 1559 upgrade on August 4th, in an effort to make Ethereum the playground of fish as apposed to whales. EIP 1559 is a major network upgrade, which will essentially flip the traditional blockchain transaction, in order to fix some major problems with Ethereum’s user experience.

One of the most well-known problems which Ethereum currently faces, is the gas fees which continue to increase as the network scales in size. Much to the chagrin of Ethereum users and developers alike, EIP 1559 sadly does not do much to lower gas fees. What EIP 1559 does solve however, is how those gas fees are used to improve the network, as well as the Ethereum ecosystem.

Traditionally, users pay gas fees to a miner, so a transaction can be recorded to a block. With the EIP 1559 upgrade the gas fee will no longer be going to the miner. Instead, the gas fee will be sent directly to the Ethereum network basefee, which acts as a type of token burn. Unlike the current Ethereum gas fees – which are set by the miners themselves – the newly added network basefee is algorithmically calculated. The goal of EIP 1559, is to make it easier for users to pay a fair gas fee. Ethereum miners will be able to receive tips for processing transactions, but these tips will be purely optional and at the discretion of the user.

As one might speculate, the Ethereum mining community is not happy about the EIP 1559 upgrade. Ethereum miners make a substantial amount of money from gas fees on the Ethereum network. Last February, total Ethereum mining revenue surpassed 1.3 billion dollars; approximately 50 percent of which, came from fees. This means Ethereum users have paid miners more than 650 million dollars in total gas fees. On August 4th, this line of income will finally come to an end. Lucky for us; not so lucky for Ethereum miners.

It is no secret that the developers of Ethereum are trying to push away from the mining of Ethereum, in preparation of the forthcoming Ethereum 2.0. In fact, we will soon be seeing the introduction of the EIP 3554 “Difficulty Bomb” protocol in December. EIP 3554 will effectively freeze the Ethereum PoW network for good, placing all the participation incentive of Ethereum on the PoS network.

Overall, the EIP 1559 upgrade will be a major improvement to Ethereum; removing the element of greed, and appropriately redistributing the wealth to the users, by means of much-needed deflationary pressure. Although there will be turbulence between Ethereum’s developers and miners in the future months to come; this same turbulence and desire to improve is why Ethereum has developed such a large following, and bullishness that is rival to Bitcoin.

If you like this article, check out Ethereum 2.0

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