London hard fork will be released on August 4th. Similar to previous updates, there is already buzz in the community. This is the next step for the network as it prepares for the monumental move from a proof of work (PoW) system to a proof of participation (PoS) system with Ethereum 2.0. The complete network change will become public sometime in 2022.
However, not all updates went according to plan. The network experienced some snags and glitches during the launch of the test networks, which caused an increase in skepticism about the news.
Despite the delays, this complete system refresh will bring the ability to compute a greater amount of transactions per second and the possibility to reduce network rates.
On the way to update London
As with previous updates, hard fork London includes a number of Ethereum improvement proposals, also known as EIPs. This latest update consists of five EIPs centered on fees of various types (network costs and refunds), transaction speed and transaction amounts via scalability.
Between London and the previous update, Berlin, the network launched testnets for developers to continue their transition to the proof of participation. While all of these hard forks are temporary until ETH2 goes public, they are crucial to preparing miners, developers and other community members for the permanent changes to come.
The most important overlay between the Berlin hard fork and the following test networks is EIP 1559. This enhancement proposal specifically targets transaction fees. High rates are one of the hot issues with the transition to PoS, especially with increased network activity due to NFTs.
EIPs aim to make Ethereum more efficient
As stated earlier, these temporary hard forks are all in preparation for what will come with the ETH2. However, these are stimulating moments for the community to get involved with a new preliminary way of functioning for the network. Here are the EIPs that come with the London update:
EIP-1559: change in the rate market for the ETH 1.0 chain
This is certainly the most talked about EIP and had the developers focused on fixing all the bugs. This starts a “base rate”, which affects all blocks in the network.
This base rate tracks rate prices across the network, making it easy to forecast the rate for wallets and users. It also allows for a defined maximum transaction and miner fee. Finally, EIP will cause transaction fees to be slashed to improve overall network economics.
EIP-3198: BASEFEE operation code
EIP 3198 follows the previous EIP as it adds an “opcode” to return the base rate value for the block in which the transaction is performed. This improvement benefits those who create smart contracts in the chain.
EIP-3529: reduction in refunds
Refunds on the Ethereum network were initially defined as incentives for developers to clean house if and when possible. However, the opposite has come true. This EIP removes fee refunds from SELFDESTRUCT and reduces them to SSTORE. Overall, this proposal will help offset the block size variation caused by EIP 1559.
EIP-3541: reject new contracts starting with byte 0xEF
Simply put, this EIP allows for the implementation of new smart contracts, which start with byte 0xEF. Those that already exist are not affected by this update.
EIP-3554: Difficulty Bomb Delay Until December 1, 2021
Lastly, the infamous difficulty bomb delay. This EIP delays the “ice age”, more formally known as the hardship bomb. This gives miners more time before mining freezes during the final transition from PoW to PoS. Although this has been postponed in the past, the transition is not ready yet and therefore it is suspended longer.
Questions about Ethereum
There is always talk as a major network update in the world of cryptocurrencies approaches. Community members and crypto influencers are known for bringing about imminent changes, whether it’s Cardano, Ethereum or Ripple.
As ETH 2.0 is slowly coming to fruition this year, some hesitant comments are starting to surface in the community. On the one hand, it must be recognized that the increase in traffic due to NFTs has increased the need for efficiency in transaction times and in the pricing of network fees.
However, at the height of the frenzy, the network posted the lowest rates since the end of 2020. This drop in rate prices came not long after the Berlin update. What London will bring is highly anticipated.
On the other hand, another network setback was not so welcome. ETH went through a price drop that approached US$1,559 before the London update. While the number 1,559 is something members of the ETH community are eager to see, the price tag put HODLers off for a moment.
As the London update approaches, miners and developers have different expectations for the updates. The main concerns are for miners, due to changes in their current work pace.
As the network evolves, the rewards of mining are one of the biggest unknowns. For those who have been at it for a long time, concerns loom over an unpredictable slowdown and centralization of the mining process. Meanwhile, developers are eagerly preparing for what promises to be a monumental shift.
On July 22, the proposed Ethereum 2.0 chain merger was formally approved via GitHub, meaning that the first step towards the ETH 2.0 merger is officially underway. Along with implementing the hard fork, the user base must know exactly what to do now.
For those who simply hold the ETH in an exchange, web wallet or hardware wallet, nothing changes unless otherwise directed there. Miners must update the ETH client and manually change the Gas target limit.
The London Update brings us all one step closer to a world of blockchains that work by proof of participation. As these new developments come to fruition, all eyes will be on the Ethereum network to see if it can maintain its place in the ever-changing decentralized sector.
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