Last week, there was a global update for Ethereum – an update called London. It was an important milestone in the project’s transition to the Proof-of-Stake algorithm, while the upgrade also introduced a new model for generating commissions in ETH, which should gradually reduce the volume of coins in circulation.
Kosala Hemachandra, CEO and Founder of MyEtherWallet cryptocurrency wallet, welcomed the successful integration of London and highlighted the main changes of the update for Ethereum. Let’s talk about the situation in more detail.
The London update was activated on August 5, 2021 at 15:33 Moscow time on block 12965000.
After the update was implemented, the network launched a mechanism for burning ethers, which users pay as commissions for conducting transactions.
Block 12965000, on which Ethereum was updated to the London update
We checked the actual data: today the volume of the burned ethers exceeded the level of 17 thousand coins. More detailed statistics on burning are offered by the Ultrasound.money platform .
The volume of destroyed ethers
The representative of MyEtherWallet drew attention to this feature, among other things.
How Ethereum will change after the update
Here is one of Hemachandra’s quotes, in which he shares his attitude to what is happening. The expert’s reply is given by Cointelegraph .
The London upgrade adds about five changes to the Ethereum network. However, in my opinion, only two of them are of particular importance to everyday cryptocurrency users.
Indeed, global updates to the Ethereum network usually consist of several «improvement proposals», also known as EIPs. For example, in April 2021, Berlin underwent an update that included four EIPs. Read more about each of them and the role of the update for the cryptocurrency blockchain in a separate article .
MyEtherWallet Creator Kosala Hemachandra
The first important milestone of the upgrade, noted by the expert, is the transfer of the «complexity bomb» . Recall that the «difficulty bomb» is a piece of code in Ethereum, introduced back in 2015. It gradually slows down the operation of the altcoin blockchain in order to motivate the network developers to switch to Proof-of-Stake. Activating the difficulty bomb raises, in fact, the very difficulty of mining, leading to an increase in the time for creating new blocks and a slowdown in the network as a whole.
As we have already noted, the difficulty bomb was supposed to motivate developers to quickly switch to PoS, which they planned to launch on the Ethereum network shortly after the launch of the project. However, the transition to Proof-of-Stake took too long, so the developers found a simple way out of the situation. They simply postponed the activation of the bomb until a later date, which saved the network from stagnation. The delay of the difficulty bomb in the London update is supposed to be the last in the history of Ethereum.
MyEtherWallet is one of the most popular Ethereum crypto wallets.
The second important component of the hard fork for blockchain users, according to Hemachandra, is EIP-1559, the very new mechanism for generating fees and burning them. Here is an expert quote.
EIP 1559 is a much talked about improvement that essentially changes the fee structure in Ethereum. It will introduce some major changes in the type of burning of transaction fees, which will reduce the growth of the total amount of ETH in circulation. However, since ETH miners will no longer receive exchange fees as an incentive, this change has previously caused great controversy.
Note that there is still an economic incentive for Ethereum mining, as miners still receive income as a reward for mining new blocks in the amount of 2 ETH and a commission on top. However, the update caused inconvenience for the pools. For example, the 2Miners pool was forced to change the payout model, the details of which are listed here.
It is also important to note that the implemented burning mechanism and the new principle of commission formation did not reduce the level of commissions in the cryptocurrency network. For example, today for a quick transfer of ETH you need to pay the equivalent of $2.75, and a quick exchange of tokens on the Uniswap decentralized exchange will cost $26.
The amount of commissions in the Ethereum network
We believe that the idea of burning tokens and eliminating ether from circulation is really good, because thanks to it the rate of issuance of coins is noticeably reduced, in addition, ETH can become a deflationary asset. However, in fact, the update did not affect the commissions for ordinary users in any way and, in addition, created problems for miners. Accordingly, it would be slightly self-confident to consider it uniquely successful.
At the same time, we assume that in the long term, the effect of the burning of ethers on the asset value will be more than noticeable. And even after the update, London ETH has already managed to return above 3 thousand dollars, which has not happened since mid-May.
Ethereum daily chart
