Ethereum, the second largest cryptocurrency by market cap, carried out the largest update of network parameters in the history of blockchain on August 5, 2021. This update is called the Ethereum London hardfork. After the hardfork, the ETH rate broke through the resistance line of $3,000 and is now trading at $3,100!
A governance voting was held on the network, where the majority supported five Ethereum Improvement Proposals (EIP): EIP 3554, EIP 3529, EIP 3198, EIP 3541 and EIP 1559. Key features of the updates are:
* Change of the consensus mechanism from Proof-of-Work (PoW) to Proof-of-Stake (PoS);
As a result, energy-consuming mining has been replaced by sustainable staking.
* Doubling the block size;
This change speeds up transactions and reduces network load.
* Introduction of fixed commissions;
Before the hardfork, the miners themselves chose which transactions to validate, typically the transactions with the highest commission for processing. Now, the commission is set automatically according to the network load and demand.
* Deflationary mechanism;
The new Ethereum standard will burn BASEFEE in ETH.
* “Difficulty bomb” postponed.
The “difficulty bomb”, which makes mining more complex, has been postponed until December. Miners will still receive income from transactions.
While the Ethereum Foundation claims that the update will improve the user experience, many miners believe it will negatively impact them. One of the main complaints from miners is the sharp drop in transaction fees. Especially for them, another update was introduced. The update moves up the date of introducing the “difficulty bomb” to December 1st. The “difficulty bomb” complicates mining, and thereby decreases the mining rewards.
Hardfork London is critically important for the network’s evolution. The boom in the DeFi sector and the popularity of DApps have revealed the key imperfection of the Ethereum blockchain – hyper-commissions and slow network performance. The London hardfork opens up new horizons for Ethereum, which will definitely have a dramatic positive effect on the price of ETH.