The upcoming Ethereum London hard fork is expected at the beginning of August. Here is everything you need to know to understand what this update brings to the network and why some in the community are skeptical.
The London hard fork rolls out on August 4. Similar to the previous updates, there’s already buzz in the community. This is the next step for the network as it prepares for the monumental switch from proof of work (POW) to a proof of stake (POS) system with Ethereum 2.0. The entire network switch goes public sometime in 2022.
However, the updates have not all gone according to plan. The network experienced a few pushbacks and failures during the release of testnets, which caused an increase in skepticism surrounding the new additions.
Despite the delays, this complete renovation of the system will bring about the ability to compute a higher amount of transactions per second and the possibility to reduce gas fees.
Leading up to London
As with previous upgrades, the London hard fork includes a series of Ethereum Improvement Proposals, otherwise referred to as EIPs.
This latest update consists of five EIPs centered around fees of various kinds (gas costs and refunds), transaction speed, and transaction quantities via scalability.
In between London and its predecessor Berlin, the network released testnets for developers to continue their transition to POS. Although all of these hard forks are temporary until ETH2 goes public, they’re nonetheless crucial to prepare miners, developers, and other community members for the permanent changes to come.
The most important overlap between Berlin hard fork and the following testnets is EIP 1559. This improvement proposal specifically targets transaction fees. High fees are one of the hot topics with the POS transition, especially with increased network activity due to NFTs.
London EIPs for a more efficient Ethereum
As previously stated, these temporary hard forks are all in preparation for what’s to come with ETH2. Nonetheless, they are exciting moments for the community to engage with a preliminary new way of functioning on the network.
Here are the EIPs that come along with London:
EIP-1559: Fee market change for ETH 1.0 chain
This is certainly the EIP with the most buzz around it and had developers focused on working out all the bugs. It ushers in a “base fee,” which affects all the blocks across the network.
This base fee tracks gas prices across the network, making it easier for gas fee prediction from wallets and users. It also allows for a set max transaction and miner fee. The cherry on top of this EIP is that it will cause transaction fees to be burned to improve overall network economics.
EIP-3198: BASEFEE opcode
3198 accompanies the previous EIP, as it adds an “opcode” to return the value of the base fee for the block on which the transaction is performed. Such an improvement benefits those creating on-chain smart contracts.
EIP-3529: Reduction in refunds
Refunds on the Ethereum network were initially set in place as incentives for developers to wipe the slate clean if and when possible. However, the opposite became a reality. This EIP removeS gas refunds from SELFDESTRUCT and reduces them for SSTORE. Overall this proposal will aid in the offset of block size variance brought on by 1559.
EIP-3541: Reject new contracts starting with the 0xEF byte
Quite simply, this EIP allows for the deployment of new smart contracts, which begin with the 0xEF byte. Those already in existence are not affected by this update.
And lastly, the infamous bomb delay.
EIP-3554: Difficulty Bomb Delay to December 1, 2021
This EIP delays the “ice age,” more formally referred to as the difficulty bomb. This gives miners more time before the freeze of mining during the final transition from POW to POS. Although this has already been delayed in the past, the transition is still not ready and thus another round.
Wavering developments of Ethereum
There is always a buzz in the lead to any big network update throughout the entire crypto space. Community members and crypto influencers are known to hype up impending changes, be it Cardano, Ethereum, or Ripple.
As ETH2 is slowly coming to fruition this year, as seen a wavering of community interactions. Of course, the increase in traffic due to NFTs has increased the need for efficiency in transaction time and gas prices. Nonetheless, at the height of the craze, the network saw the lowest gas prices since the end of 2020.
This slump in gas prices appeared not too long after the Berlin hard fork. What London will bring on is highly anticipated.
On the other hand, the other network slump was not quite as welcomed. ETH saw low prices that hovered close to $1,559 in the lead up to the London upgrade. For the most part, 1,559 is a number ETH community members are keen to see, though these prices dismayed HODLers.
As London draws ever-nearer, miners and developers sometimes have different expectations from the updates.
The main concerns are from miners, because of the alterations to their current modes of working. As the network evolves, mining rewards are one of the biggest unknowns. For those who have been in it for the long haul, concerns are over an unpredictable decrease and centralization of the mining process.
Meanwhile, developers have been eagerly preparing for monumental change. On July 22nd, the Ethereum 2.0 chain merge proposal was formally approved via GitHub, which means the first step to merge to ETH 2.0 is officially underway.
Along with the hard fork rollout, the user base should consider their next move. For those who simply hold ETH in an exchange, web wallet, or hardware wallet, nothing changes unless otherwise directed by the given operator. Miners should update the ETH client. They must manually change the threshold of the gas target limit.
London brings us all a step closer to a blockchain space led by POS. As these new developments manifest, all eyes will be on the Ethereum network to see if it can hold its place in the ever-changing decentralized space.