The biggest Ethereum network update for years has gone live Today, drastically changing how the blockchain handles transactions fees. Ethereum London, the name of the hard fork, should bring some well-needed stability back to the Ethereum network after months of unpredictable fees and slow transactions.
However, not everyone is happy with the hard fork, as the new changes reduce the profitability of Ethereum mining, which may reduce the number of miners processing transactions on the network. As of Ethereum block 12,965,000, Ethereum Improvement Proposal (EIP) 1559 went live. The Ethereum hard fork drastically changes how new transactions are added to the Ethereum network. In short, miners will no longer collect the transaction fee associated with the successful mining of a block. Instead, those associated transaction fees are now sent to a so-called dead-end address and burnt. That is, taken out of circulation and removed from existence.
Ethereum miners still receive the standard 2 ETH block reward, and in place of the transaction fees, those using the network can include a tip for whichever miner processes their block. But the ability to set custom transaction fees is effectively removed, which is massive in terms of blockchain technology.
Why Is Ethereum Removing Transaction Fees?
While the abandonment of transaction fees is a groundbreaking decision for the Ethereum network, it isn’t unexpected. The Ethereum London hard fork is seen as a stepping stone to the long-awaited Ethereum Casper Proof of Stake upgrade, or Ethereum 2.0. Ethereum intends to switch from its current Proof of Work algorithm (the same consensus algorithm type as Bitcoin, which uses lots of energy) to Proof of Stake, reducing energy costs and delivering increased network stability.
The step towards Ethereum 2.0 isn’t the only reason for the change. The phenomenal rise of DeFi apps such as Uniswap and Pancake swap have added to an already congested network. With more DeFi products coming online and network use continuing to rise, creating a system that simplifies (well, sort of!) Ethereum network transaction fees are important.
Will the London Hard Fork Cause a Split in Ethereum Miners?
Previous blockchain hard forks have caused fractures for blockchain networks. When a hard fork alters a core aspect of a blockchain, as Ethereum London does, miners and other users often refuse to make the switch. In the case of a hard fork, they can refuse the update and continue using the old system, albeit likely with a drastically reduced user base.
For now, Ethereum users are holding their breath. But, with miners expected to lose anything from 20-50 percent of their transaction fee income, turbulent water looks like the only outcome.
What do you think about the ethereum London hard fork ? would this upgrade push the asset price up, or we might see a continuous down trend movement, let us know in the comment section.