By Shelly Melancon (Switzerland)
- July 2021’s London hard fork will likely be the springboard for EIP-1559.
- ETH prices now at $1,887 after a 2.5% decline in value.
- The proposed EIP-1559 will have positive ramifications on eth, including its prices.
Industry watchers say that ETH gas-saving upgrade could happen in the next few months; this is good news as it has been long anticipated.
After the launch of ETH 2.0 on the first of December, 2020, the focus of all recent discussions has been about the upgrade for this network – the Ethereum improvement proposal (EIP)-1559.
The EIP aims to resolve the resulting issues arising from the high transaction fees, which have been the network’s bane over the past few months.
There’s now massive demand for Ethereum because of the increase in value and the DeFi sector’s increasing popularity. Thus, gas fees have increased to record new highs. Bitinfocharts reports that the current average gas transaction fee is $3 below $20. It is on record that it has risen to $25 severally within this month.
Ryan Berkman (a developer for Ethereum and owner, predictions global) suggests that a July launch for the upgrade is likely, and it will coincide with the ‘London’ hard fork.
Also read:How It Impacts Ethereum
EIP-1559 uses a hybrid system of base fees to improve Ethereum trade deals’ efficiency. A base fee is a recursively determined fee for Ethereum trade deals.
The EIP-1559 will affect ETH supply even though it can’t influence ETH trade value directly. It will also reduce gas fees and, with time, decrease issuance, especially when the proof-of-stake is in progress. According to Berkman’s, this proposal will be incredibly beneficial to layer-2 suppliers:
“Since the EIP-1559 will allow arbitrum and optimism to successfully transfer their security trade deals to the immediate Ethereum block, it will cause a positive impact on Ethereum for the remaining months to come. EIP-1559, optimism, and arbitrum are all vital to the scaling of Ethereum in 2021.”
In an analysis published in the first week of February 2021, Ryan predicted that this proposal might enhance ETH prices to over $21,000 since holders will earn the burn fees rather than the miners making all the profits.
This proposed EIP-1559 will also utilize tips to motivate miners equally whether network congestion is low or high. While these tips are optional, they can speed up transaction rates.
Long-term effects on burn fees
Vance Spencer, co-founder, framework ventures, opined that a “windfall of wealth” could result from this significant reduction in ETH fees.
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