The Ethereum network welcomed another massive update on August 5, launching a deflationary mechanism. ETH is up 17% ahead of the hardfork.
On August 5 at 18:00 UTC, the long-awaited London hardfork was launched on the block #12965000 in the Ethereum blockchain. The hardfork included five key updates regarding the volume of coin issuance, structure of commissions and miners’ rewards.
EIP-1559 is considered the main update. It introduces key changes in the mechanism for calculating trx fees and rewards for miners. After its deployment, the network has a minimum fee for using the blockchain (basefee), which fluctuates depending on the demand to include transactions in the block. If the user wants his transaction to be completed faster, he can incentivize miners with an additional fee, a kind of tip. Now, miners’ rewards will only consist of these transaction tips, and the base fees will be burned by sending them to an address without the possibility of reverse withdrawal. The amount of coins to be burned will be determined algorithmically and depend on the network load. Thus, the ETH network whose emission has no limitations unlike bitcoin achieved a deflationary mechanism.
Other London updates include:
EIP-3198. Extends the EIP-1559 update to smart contract transactions. This allows smart contracts or DApps to immediately receive the basefee value, thus, improving the performance of decentralized applications.
EIP-3529. Disables the gas charge compensation function when performing SELFDESTRUCT and SSTORE operations. This feature was originally introduced to encourage developers to create applications that use storage resources efficiently, which in theory should have reduced the amount of redundant code. But in practice, users used it incorrectly trying to cheat the system.
EIP-3541. Optimizes work with new format smart contracts (EVMOF).
EIP-3554. Delays the difficulty bomb (mining difficulty increase) until December 2021.
The price of ETH began to rise even in anticipation of the hard fork, and after the successful deployment of the updates, it exceeded $2,700.