There’s been much hype around the arrival of the Ethereum London hard fork and now we are just one day away. The countdown tracker from Ethereum.org shows the hard fork will go live in the next 24 hours from press time. The announcement on the website reads:
“The London upgrade is scheduled to go live on Ethereum in August 2021, on block 12,965,000. It will introduce EIP-1559, which reforms the transaction fee market, along with changes to how gas refunds are handled and the Ice Age schedule.”
There’s also been major excitement around EIP-1559 protocol implementation. The Ethereum Improvement Proposal 1559 will change the way how the Ethereum blockchain handles transaction fee. It will also reduce the inflation of the blockchain by partly burning ETH as a gas fee. Thus, it aims to make the Ethereum network deflationary over time.
With EIP-1559 implementation, each transaction will burn a base fee while decreasing ETH’s circulating supply. It also gives users the option to include a pro tip for incentivizing faster confirmations. Twitter user Korpi explained why EIP-1559 is bullish for the Ethereum blockchain network. In a myth-breaking thread, Korpi explains:
“It (EIP-1559) doesn’t lower gas fees in the long run because it’s not a scalability improvement. However, it may help users not overpay for transactions due to a better fee estimation process. It also smooths out gas prices between blocks thanks to variable block sizes.
Despite burning partial transaction fees and removing ETH out of circulation, it doesn’t immediately make ETH a deflationary asset. For this, the rate of ETH burning must be higher than ETH issued in block rewards.
Ethereum Miners Set to Face the Heat with London Hard Fork
The Ethereum London hard fork is the first step towards the implementation of Ethereum 2.0. This year, Ethereum miners enjoyed a great time with a massive surge in the on-chain activity led by DeFi and NFTs. Thus, the revenue from mining has been a major source of earning for the ETH miners.
But this is now set to change very soon! Certainly, miners can shift to being validators on the PoS Ethereum blockchain, they will have to book major losses for the costly equipment purchased. However, there’s a way for users to tip the miners for urgent transactions but it will only be a fraction of the gas fee. CoinDesk wrote:
“Instead of pocketing 100% of transaction fees, miners will only receive tips from users through an optional “inclusion fee,” paid electively by users seeking priority for their transactions”.
Post the London hard fork, even if the transaction fee won’t go to miners, users still have to pay for it. The fee will rather go to an inaccessible crypto wallet used for ETH burning.