In recent months, there has been plenty of talk about the upcoming changes to Ethereum. These changes will be coming this year and next in the form of Ethereum EIPs. These are Ethereum Improvement Proposals, specific standards which dictate the potential future of the cryptocurrency. This last month saw the “London Hardfork Upgrade,” which contained five new updates called Ethereum EIPs.
In this guide:
A brief intro on EIPs
Anyone can create an EIP; you only have to read the process of proposal and design thoroughly. The idea behind these proposals is that it will lead to the continual improvement of the Ethereum ecosystem.
The London Hardfork Upgrade contains EIP 1559. This will take the first steps to make the Ethereum gas price cheaper and making the crypto a deflationary asset.
These EIPs are preparing for the cryptocurrencies’ transition from proof-of-work to proof-of-stake next year. When this happens, it could make Ethereum one of the greenest cryptocurrencies around.
What is the history behind Ethereum EIPs?
In 2015, developers created the Ethereum Improvement Proposal repository on GitHub, an internet platform for software development. The EIPs took inspiration from the Bitcoin Improvement Proposals, and the writing and review process is similar.
In 2015 and 2016, a number of editors were appointed to ensure the quality and clarity of such proposals. This included a major co-founder of Ethereum, Vitalik Buterin. Since then, the team has expanded and changed, as demand has changed.
What are Ethereum EIPs?
An Ethereum EIP (Ethereum Improvement Proposal) is just that. A proposal consists of documents, put forward by Ethereum community members, proposing improvements to the cryptocurrency and smart contracts. A team of editors reviews these EIPs and makes decisions on which to take forward to a potential upgrade.
An Ethereum EIP is typically similar to many research papers, containing an abstract, motivation (the underlying reasoning), and technical specifications. In addition, it should also include a rationale and information relating to backwards compatibility, security considerations, test cases, and rationale.
How do EIPs work?
EIPs can be written up and proposed by any member of the community and submitted to GitHub. They are then discussed by members of the Ethereum community and go through a process for approval. This includes going in front of editors for review.
Forum members and Ethereum enthusiasts also discuss the proposals, giving the writer valuable feedback. An example of such a proposal could be a change to ERC-20, the technical standard for Ethereum transactions on the blockchain. However, other EIPs may relate to other elements of Ethereum.
Who decides on EIPs?
Regularly, a committee of editors, including members of the Ethereum community and Ethereum Foundation, review new EIPs. While the editors used to include the founder of Ethereum, Vitalik Buterin, the team has evolved with the cryptocurrency.
The team consists of Micah Zoltu, Nick Savers, Nick Johnson, Hudson James, Matt Garnett, Casey Detrio, Greg Colvin, and Alex Beregszaszi. An EIP then goes through a number of statuses before upgrade implementation. This may include, as part of the process, further drafts that require examination before approval and implementation.
The most recent update activated a fork, seeing changes to the Ethereum network come in from later this year.
What will this do to the ethereum price?
Generally speaking, people expect an increased demand for ethereum, sending the ethereum price up, in the coming months. However, if the upgrade makes ethereum a deflationary asset, this could result in some major changes to the cryptocurrency.
However, the positive of this is that the gas fees, the cost of the transaction, is likely to be cheaper. This is, in part, as a result of Ethereum transitioning to proof-of-stake. Subsequently, this could also lead to an increase in the price of ethereum, a massive positive for holders of the cryptocurrency.
What does this mean for the future of Ethereum?
In general, Ethereum Improvement Proposals will bring positive changes to the community. The key word is ‘Improvement,’ so this would suggest that the cryptocurrency can only get better. There will, however, be some proposals that do not stand up to scrutiny. On the other hand, this is why there is a team of editors and the community to filter these out.
EIPs will continue to shape the future of the Ethereum blockchain for the better, with collaboration from the community. As it transitions to Ethereum 2.0 next year, proposal drafters will direct the cryptocurrencies’ future, wherever it may go.