According to insiders, the long-awaited improvement of EIP-1559 will be implemented in the London hard fork, it will help reduce the cost of gas on the Ethereum network.
The crypto industry is discussing a proposal forimproving Ethereum (EIP) 1559 since the launch of the ETH 2.0 network in December 2020. This initiative will help save on transaction costs in the second most popular cryptocurrency ecosystem.
In recent months, the high cost of ETH transactions has grown into a huge problem for users and projects built on the ecosystem.
Rising prices for cryptocurrencies and a boom in the segmentDecentralized Finance (DeFi) is driving demand for Ethereum and increasing network congestion. As a consequence, the gas commission breaks record after record. According to BitInfoCharts, now you will have to pay an average of $ 17 per transaction. Earlier this month, values reached $ 25.
EIP-1559 introduces a mechanism for correctingthe current auction process that determines the cost of transactions. Commissions will be dynamically adjusted so users can pay the lowest block rate.
Predictions Global founder and Ethereum developer Ryan Berkmans suggested that the update could be launched in July as part of the London hard fork.
1 / EIP-1559 is huge for ethereum and coming soon
- likely launches in July
- delivers important benefits to all ethereum users
- would have burned ~ $ 26M in ETH yesterday
Here are some EIP-1559 resources
- Ryan Berckmans (@RyanBerckmans) February 21, 2021
Good for Ethereum
Although EIP-1559 is not directly related to the ETH rate, itwill positively affect the supply side. As a result of the improvements, fees will be dynamically burned, reducing emissions before running the proof-of-stake cosensus algorithm.
Berkmans added that tier 2 providers will benefit from scaling with the upgrade;
“EIP-1559 will help scale Ethereum already inthis year, allowing developers of second-tier solutions Arbitrum and Optimism to safely move their transactions to the next ethereum block. These two solutions are vital for ethereum scaling this year, so EIP-1559 is also needed. "
Earlier this month, a developer suggested thatin the long term, the upgrade could push the value of ETH towards $ 20,000 because the coin holders will benefit from the burned fees, not the ether miners.
Bullish Burning Fees
Framework Ventures co-founder Vance Spencer speculated that the massive burning of ETH fees would trigger a "wealth tsunami."
1559 season approaching rapidly
ETH has ~ $ 5.5bn of fees (9% of ETH supply) per yr, assume 1559 burns half
$ 2-3bn of high growth fee burn gets valued by market at 100x
ETH wealth effect tsunami, ETH DeFi whales get even bigger
ETH whale chain wins
L2 is gravy https://t.co/dfwaYLmB6r
- Vance Spencer (@pythianism) February 22, 2021
It is now assumed that miners are sellingearned ETH to cover costs. Without this pressure from sellers, the asset will have more room to grow, especially after the move to Proof of Stake (PoS) consensus.
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