Mark Weaden
Ethereum activates the highly anticipated “London” upgrade to its blockchain network, as it moves towards becoming a deflationary asset.
The London hard fork was released today, bringing in the proposed improvement (EIP 1559) to the Ethereum (ETH) network. The update is the first of many improvements that will be made to the Ethereum blockchain, with the next overhauling the network’s transaction fee market and other parameters.
Rather than creating more Ether per transaction, the new EIP-1559 will mean Ethereum burns the base fee of each transaction, decreasing the overall ETH supply. The move is highly applauded amongst the crypto community, as they see Ethereum as one of the cryptocurrencies with the most potential, alongside its big brother Bitcoin.
The update saw major cryptocurrency exchanges, including Coinbase and Binance, pausing trades on the network. The activation of EIP-1559 is one step closer to the transition to Ethereum 2.0, which will take the network from a proof-of-work consensus to a proof-of-stake protocol.
What this means for Ethereum
The Ethereum community and node operators have been asked to upgrade their nodes as soon as possible. Turning Ether into a deflationary asset would mean that its scarcity would increase, increasing its market price in the long term and adding value to the blockchain.
Prior to the upgrade, the price of ETH jumped over 8% in value. We have seen the cryptocurrency market climb significantly in the last couple of weeks, for the first time since the markets halved back in May. Over 30 days, ETH has gained 21%. The price is hovering around $2,600 at the time of the update, an exciting time for the second-largest cryptocurrency by market capitalization.
Ether hit its all-time high of just over $4,200 back in May. Now, with the markets climbing and the network making significant improvements, we could see Ethereum climb even further towards the end of 2021.
Once the London upgrade is fully integrated, engineers will look to improve block elasticity and rehash the Ethereum transaction fee market. This will be the next upgrade, going under the name of the Shanghai hard fork and will be the focus for the network.
