The highly-anticipated Ethereum (ETH) London upgrade is here, bringing with it the revamp of the network’s monetary system through the Ethereum Improvement Proposal, or EIP, 1559.
The second cryptoasset according to market capitalization has seen a rise in price over the past week, rising 21% and 3% respectively. It was trading at USD 2,782 at 16:19 UTC.
It had reached a record high of almost USD 4,357 per Coingecko in May and has fallen 37% since.
Some exchanges suspended withdrawals and deposits of ERC-20 and ETH tokens during the upgrade. They later resumed it as there were no major issues after the hard fork. Binance stated that this was done to lower trading risk due to price volatility, and to preserve the safety of user funds.
Imagine Apple shares being burned
London’s upgrade is the next step after April’s Berlin upgrade and includes five EIPs.
EIP-1559 is the most talked about in recent months. It’s accompanied with EIP-3198, EIP-3529. Two other included proposals are EIP-3541 and EIP-3554, the first of which is meant to set the stage for broader Ethereum Virtual Machine (EVM) improvements, and the second to delay the difficulty bomb, aka the ice age, to December 1.
As for EIP-1559 itself, as reported in more detail, it brings an automatic token burn mechanism for each transaction, and is expected to help improve the fee market.
It will allow for better estimation of transaction fees and more reliable transaction inclusion.
However, it will not lower gas prices over the long-term nor make ETH deflationary automatically.
Ross Middleton (CFO of DeversiFi) called the upgrade “a big day for Ethereum cryptocurrency ecosystem,” stating that every transaction, purchase, or loan on Ethereum will result in ETH being destroyed.
Middleton stated that Apple Inc would be the equivalent. This would happen whenever someone buys something in the Apple App Store or makes an in-app purchase.
During the Bankless livestream a number key members of the Ethereum ecosystem confirmed the upgrade had gone live. They also continued to monitor various aspects for potential issues.
Trenton van Epps, an Ethereum developer, stated that everything is burning ETH exactly as it was expected.
Participants noted that ETH 3 was almost burned within 10 minutes. It was 4 minutes later that it had reached more than ETH 8.
Hasu claimed that the current rate of burn will not continue for ever.
Be patient and be aware
The EIP will not bring about many of the improvements that are expected. A number of industry insiders like Talyor Monahan (HTC CEO) have warned users to expect lower expectations and be mindful that the fork may not work as expected. We’d witnessed problems during the Berlin upgrade.
Others have noted that a variety of issues and bugs can pop up, but also that this particular EIP has been tested extensively.
Hudson Jameson, a software engineer and software developer, said that everyone would know when something was wrong because the key people would “leak stuff over Twitter” slowly and without panic.
Participants also pointed out that the hashrate would have some effect, although it is currently difficult to know exactly how.
The EIP-1559 contributors described the EIP as “an incredibly complex change, the largest done on Ethereum mainnet to date, which will improve both the user experience and economics of the entire network.” They also stated that the engineers, researchers, as well as other contributors, will not directly benefit from the network’s ultimate benefits.
As of the time of writing on Thursday, 77% of clients are ready for the upgrade, per ethernodes.org data.
Node operators will need an update to their client versions in order to make the London upgrade compatible.
“If your Ethereum client is not up-to-date to the latest […],, the client will sync to prefork blockchain when the upgrade takes place. The old rules will still apply to you, and you won’t be able to send Ether or use the new network. Tim Beiko, the Ethereum Foundation community manager, wrote that this will result in your being stuck with an incompatible chain.
Beiko told Cryptonews.com that “if people have not upgraded their nodes, then they will need to the next time they use it.” Some nodes may not have upgraded, which could cause them to cease being valid peers in the network. People forget or miss the announcements, etc.
“It’s also important to note that these crawler sites don’t have a complete view of the network so the numbers could be misleading. These numbers are probably correct, but I wouldn’t give too much weight on the percentages,” Beiko said.
Eric Conner, co-author of EIP-1559, stated that MetaMask can still function even though it does not support the new transaction fee path. He added that while Legacy [transactions] can still be supported, not all wallets will switch over at the same time.
MetaMask however confirmed that they will be rolling out support for the upgrade.
Beiko stated that users want to pay miners a high enough priority fee/tip so that they can include their transaction. This will allow them to make more money.
Also, Hasu tweeted answers to two major questions asked within the Cryptoverse.
If wallets don’t support EIP-1559 at the beginning, the old transaction format is retained and the gas price is converted to EIP-1559 (max basefee + tip that the user is willingly to pay). He advised that it was important not to pay too much for transactions.
All transactions, even those from the past, will be handled in the new format. Miners must burn ETH to include them.
Meanwhile, this is just one upgrade on a long path that is the unrolling of Ethereum’s second iteration, ETH 2.0. Joe Lubin, CEO of Consensys, and cofounder of Ethereum, said that this iteration would be “a paradigm change.”