800 ETH Burned Since the Launch of Ethereum London Upgrade Including EIP-1559 on Ropsten Testnet
The much-anticipated Ethereum London upgrade is nearing its finish line as the latest milestone was achieved with the launch of the hard fork on testnet.
Ahead of its full deployment next month, this week, the upgrade that includes the EIP-1559 has been released on Ropsten.
“We have a block! Took a bit longer than expected, but London is live on Ropsten,” tweeted lead developer Tim Beiko early on Thursday.
The next step of the London hard fork rollout will be deployed on the Goerli testnet scheduled for June 30, following that it will be launched on the Rinkeby testnet on July 7, and finally on Ethereum mainnet later in the month.
The big question regarding the upgrade is if this will reduce the gas fees, which during the ongoing lack of on-chain activity and introduction of layer 2 solutions has already gone down significantly. While the gas fee is about 10 gwei right now, the average transaction fee on the network is around $3.50, nowhere near the $70 peak in mid-May.
EIP 1559 actually doesn’t aim to reduce the fees, although it can bring fees predictability which may see users not overpaying gas fees frequently. The upgrade will actually change the current fee auction mechanism and have a “base fee” for transactions to be included in the next block. Those who want their transaction to be the priority can add a “tip” to speed up things.
What EIP 1559 will do is, it will burn this ‘base fee,’ which changes spending on how full a block is, allowing users to set lower and more accurate gas fees. Burning the gas fees will effectively make Etherum a deflationary asset.
About 800 ETH has been burned since the launch on the testnet, which can be seen here, a tool shared by EthHub founder Anthony Sassano.
— Péter Szilágyi (karalabe.eth) (@peter_szilagyi) June 24, 2021
This reduction in supply is expected to push up the prices of Ether, which recorded a drawdown of over 66% during the recent sell-off. As of writing, ETH is trading under $1,900.
According to DCInvestor, EIP-1559 won't’ have any immediate positive effect on ETH price because “too many people think it will, and the mechanism itself won't burn that rapidly also plenty of data from BTC halvenings to show effect not immediate but long-term, it is hyper-bullish.”
However, it isn't about near-term price pumps but “enhancing UX and about economically strengthening ETH as an asset for long-term,” he added.
In the meantime, the ETH community remains excited about the proof-of-stake (PoS) shift which is expected to be activated on Ethereum through a backward-incompatible upgrade or “hard fork” sometime early next year. With this, ETH 2.0 validators will take over miners’ possibility to order transactions and start earning fees on top of the interest they receive from staked Ether.
So far, nearly 6 million ETH have been deposited in ETH 2.0 for staking.
Since January, the amount of Ether held in smart contracts has been on an incline as well, rising by more than 50% to an all-time high at 26.7 million ETH in complete contrast to the amount of ETH held on cryptocurrency exchanges which fell to a two-year low of 13 million ETH.