A much-anticipated upgrade to the Ethereum network, which may turn ETH into a deflationary asset, is now slated for the hard fork “London” in July.
Ethereum’s lead developer Tim Beiko previously teased that the decision would be made two weeks ago today and suggested adding it to the Core Developers call today. There were no oral objections.
“We are in a place where the EIP is flawless,” Beiko said on the call. “[…] I think we’re in a place where it’s ready to be included in an upgrade. “
The proposal, co-authored by Ethereum co-founder Vitalik Buterin, will turn Ethereum’s fee structure away from a bidding system that allows miners to prioritize the highest bids. The new fee structure dynamically and programmatically adjusts fees so that users only pay the lowest bid for each block.
In addition, the basic network fee is now “burned” with every transaction, possibly leading to a deflationary token economy for ETH.
The proposal was largely anticipated by almost all members of the Ethereum community, including investors, speculators, and regular users of the network. An analysis of network transactions last year found that EIP-1559 would have burned 1 million ethers in 365 days – almost 1% of the network. Earlier this month, research by ETF issuer Grayscale concluded that a deflationary mechanic will be a boon to the price of ether, creating a positive price feedback loop.
Users have been frantic about gas fees for months too, and there have been some notable examples of sky-high fees for simple transactions, including a $ 36,000 uniswap trade.
One notable group less enthusiastic about the proposal is the Ethereum miners. There have been threats of a hard fork and an alternative proposal, and some estimates put the loss of revenue for miners at 50%. Ultimately, however, the proposal goes further and ends “selfish” mining practices.
