London Hard Fork — What did it change?
Ushering in a new era for the transition to Ethereum 2.0
Last Thursday, The London hard fork of Ethereum went live to usher in a new era for the transition to Ethereum 2.0, a complete proof-of-stake (PoS) blockchain. This upgrade is one of the final steps for the transition to PoS which is scheduled sometime in 2022.
Alongside the highly anticipated Ethereum Improvement Proposal (EIP) 1559, this upgrade also brings four other EIPs onto the network, EIP-3554, EIP-3541, EIP-3198, and EIP-3529. EIP-1559’s main change and addition is the management of transaction fees on the blockchain. Previously in the older pricing mechanism, transaction fees would go to miners directly, but now, there is a fixed-per-block network fee that has been implemented. This comes as unfortunate news for miners, as this will eventually lead to lower revenue from these transaction fees.
Miners will still have an additional stream of revenue over the two Ether (ETH) rewards that they receive for every newly minted block. The EIP-1559 also adds the idea of a “tip” to the transaction pricing mechanism. The tip is expressed as a priority fee so that applications and users can choose to pay extra if they want their transaction to be prioritized.
ETH gains surpass BTC among other metrics
This hard fork for Ethereum has led to some massive gains for Ethereum. ETH has fluctuated around $3,000, about 30% off the all-time high of $4,362 it reached on May 12, 2021. ETH is trading at levels similar to May, before the major crash of the crypto market in the middle of the month.
Bitcoin has also boasted impressive gains in the past week, however, Ethereum has outperformed it once again. The seven-day gains for ETH are around 29% compared to around 22% in Bitcoin’s price. Although the London upgrade is an important step in the Ethereum roadmap, the movement behind it that it represents is way larger. The hard-fork is continuing the mission behind crypto, and representing the impact of institutional investors, nonfungible tokens (NFTs), decentralized finance (DeFi), and the general public’s distrust of centralized finance (CeFi).
The next step for Ethereum would be the last step to the PoS, which is likely to happen in early to mid-2022.
Whether these predictions will come true or not is hard to say, but it is apparent in the market sentiment that despite the slump in the market between June and July, Ethereum is solidifying its place further as the cryptocurrency with utility, especially with network upgrades such as the London hard fork spurring its growth by addressing pre-existing pain points like gas fees.
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