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4 Aug 2021

Ethereum 'London' upgrade

On August 5th, 2021 the Ethereum blockchain is going to carry a new hard fork, this time bringing an upgrade named 'London'.
This is a major update that includes five Ethereum Improvement Proposals (EIP), and represents another step towards the full adoption of the Proof of Stake by the ETH community.

The most controversial of the five upgrades is the EIP-1559. This upgrade will change the way network fees are working by introducing a fixed-per-block network fee that will be burned on each and every transaction.

While the EIP-1559 aim is to gradually reduce the total supply of ETH that will inevitably incentivize the use of ETH as a "store of value", the other EIPs are going to make the Ethereum transactions faster and cheaper.

The Miners point of view
ETH miners are, among all stakeholders of Ethereum, the only ones that will suffer from the London upgrade.

Currently, an ETH miner takes the entire amount of transaction fees plus the block reward for "his job", after the London upgrade the transaction fees will be burned and the miner will get only the "Tip" from the transaction, together with the block reward.

Transaction Tips
After the upgrade, making a transaction on the ETH chain will cost a fixed amount of fee plus the Tip for the miner. Since the tips are going 100% to the miners, miners will be encouraged to prioritize higher transaction tips. Therefore the higher is the tip, the faster the transaction will be executed. So, don't be stingy with tips when transacting on Ether!
The impact on the ETH price
Because it will have a big impact on the way the Ethereum chain is being used, the impact that the London upgrade will have on the Ethereum price should be huge. By reducing the amount of ETH available at every transaction recorded on the ETH chain, the value of Ethereum will surely gain a multiplier effect on its price. Although everyone is sure about the positive effects that this upgrade will have, no one can really tell what will happen to the markets during the first days of the new protocol EIP-1559.
At last but not least, ETH will be still available on the market and tradeable via Yanda.io. The new fork will not require any action from traders that will simply have to enjoy trading with a new powerful protocol of Ethereum.

The official announcement: https://blog.ethereum.org/2021/07/15/london-mainnet-announcement/

If you want an easy explanation of all EIPs of ETH London Hard fork: https://medium.com/geekculture/ethereum-london-hard-fork-what-will-change-a20b3461381a

Author: Francesco Greco