By Shelly Melancon (Switzerland)
The proposed London upgrade for the Ethereum blockchain has begun its testing in preparation of the Ethereum update (EIPs) that would introduce a basic fee structure and the mining difficulty time bomb. The EIPs to be integrated on the blockchain are in preparation for the shift from Ethereum 1.0 to the ETH2.0 which will have the PoS algorithm as its framework. In contrast, Ethereum 1.0 is built on a PoW algorithm.
As the momentum is mounting for ETH 2.0, the first test for the London update was started on the Ropsten testing network late June. The update will feature the highly expected EIP 1559 which is aimed at solving the issue of high gas fees and blockchain congestion. Other testing networks namely Goerli, Rinkeby and Kovan will take place before the main blockchain. In addition, the London update will introduce other EIPs, but they are not as notable as the EIP 1559 and 3554.
London Update to Introduce EIP 1559
As earlier mentioned, EIP 1559 will introduce a basic fee structure such that fees on the blockchain do not go over the roof even during periods of congestion. The upgrade will also include a deflationary structure on the blockchain, whereby basic fees are burned in order to reduce the circulating supply of Ethereum. Basic fee is determined by the blockchain.
However, users have the option of adding a separate fee to influence the confirmation speed. In other words, the ‘priority fee’ makes miners attach more importance to users’ activity. Moreover, miners get rewarded with the priority fees (more or less a tip) alongside the normal block rewards. The basic fee could however vary on each block depending on the blockchain’s activity. Meanwhile, some experts commented on the basic fee structure saying it will instigate a ‘fees war’ among users who try to prioritize their activity by tipping miners.
On the other hand, the EIP 3554 will make mining on the blockchain difficult until the shift to the PoS-based ETH 2.0 is complete. This update is scheduled to take place by the start of December. According to reports, EIP 3554 has always been part of the Ethereum blockchain, but was getting postponed. Details further revealed that the transition may likely be shifted.
6 Million ETH Staked in Anticipation for ETH 2.0
Interestingly, data from crypto analytics firm CryptoQuant showed that more than 100,000 ETH was deposited for staking the day the update first began on the Ropsten testing network. This is a pointer to how much the upgrade is well anticipated by the blockchain’s community. Data puts the amount of ETH currently staked on the blockchain at over 6 million, totalling $12.76 billion.
The amount staked represents 5% of the circulating supply of the altcoin, which is small compared to the amount staked on other blockchains. Other percentages of total ETH supply elsewhere. The shift to Eth2.0 will be a hard pill to swallow for miners as they have to discard their mining equipment and possibly become validators on the blockchain.
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