Here’s everything you need to know about the upcoming Ethereum London upgrade
- London upgrade is ready for activation, set to go live between August 3-5.
- EIP 1559 protocol is included, fee market change for ETH 1.0 will be implemented.
- Difficulty bomb delay pushed to December 2021.
The Ethereum Foundation announced on their blog that testnet deployment is successful, and the London upgrade will go live on the mainnet at block 12965000. The event is estimated to occur between August 3-5, 2021.
London upgrade ready to be activated on Ethereum mainnet
The following Ethereum Improvement Proposals (EIPs) are included:
- EIP-1559: Fee market change for ETH 1.0 chain
- EIP-3198: BASEFEE opcode
- EIP-3529: Reduction in refunds
- EIP-3541: Reject new contracts starting with the 0xEF byte
- EIP-3554: Difficulty Bomb Delay to December 1st, 2021
EIP 1559 is one of the most highly anticipated protocols since it will introduce a “base fee” in blocks mined on the ETH 1.0 network. The gas price that the Ethereum network accepts will be based on the demand, and it will be easier for users to estimate the right fee for their transaction.
Additionally, EIP-1559 allows users to specify the maximum fee they are willing to pay and the amount they are willing to send to the miner. If there is a difference between the maximum and the actual fee, the user gets a refund.
Part of the transaction fees is set to be burned, and a large part of the community is looking forward to burning ether. It is viewed as a critical improvement over the economics of the Ethereum network. Ethereum enthusiasts are also eagerly awaiting the ‘merge’ or the shift from Proof of Work (PoW) to Proof of stake (PoS) as the next critical step towards Ethereum 2.0.
EIP 3554 delayed the ice age to December 1, 2021
Ethereum’s difficulty bomb, also known as the ice age, is the mechanism through which the network will “freeze” mining and transition to PoS. The transition is not ready yet, and for the fourth time, the community has to wait until December 1, 2021. It is expected that the merge will go live in December, unlike the three previous instances.
The Metropolis (EIP 649), Constantinople (EIP 1234) and Muir Glacier (EIP 2384) are the three protocols that delay the ice age before EIP 3554. These delays have proven to belong. However, developers have opted for a relatively shorter delay this time around.
The community is largely optimistic about the remaining protocols going live in the update. This brings Ethereum one step closer to mass adoption and deflation.
Ethereum may never become ultrasound money until supply remains malleable
Ultrasound money is a term originally used by Justin Drake, an Ethereum researcher. He argued that if Bitcoin is sound money based on its supply cap, Ethereum must be ‘ultrasound money.’ This argument is based on the potential decrease in supply after EIP-1559 goes live and the eth1<>eth2 merge is implemented.
When crypto enthusiasts use the term Ultrasound money, it implies that Ethereum is money. Currently, it is far too volatile to replace the existing fiat currencies. Even if the community uses ETH as a medium of exchange (MoE), it is much more likely that stable money built using ETH as collateral will be adopted at a much faster rate.
On a broader scale, the narrative of sound money that applies to Bitcoin may not apply to Ethereum at all, since as of now, Ethereum does not have a hard cap. ETH has a much broader use case with DeFi platforms and expansive NFT projects. Decentralized finance. The altcoin circulates more frequently than Bitcoin, and about 68% of its supply (vs. 46% for Bitcoin) is currently in circulation.
When Ethereum was launched in 2015, 72 million ether was created. However, there is no cap on the number of ether outstanding. The narrative that ether is meant to be sound money needs more validity through a fixed supply.
Until the supply remains malleable, there is no way to ascertain if burning part of transaction fees or the merge will lead ETH to be used as money. ETH continues to be an ideal collateral asset due to its large market capitalization (economic bandwidth) and liquidity, but the altcoin is far from becoming ultra sound money.
Anthony Sassano, the founder of The Daily Gwei, has been an earnest proponent of ETH as a store of value and decentralized asset. In his recent tweet, Sassano explained that the ultrasound money had caused a divide in the community, and he considers it a meme.
ETH is ‘ultra sound money’ – it’s a meme that’s caused divide in the community with some people calling it “cringe” while others think it describes ETH perfectly.
— Anthony Sassano Ξ (@sassal0x) July 12, 2021