Ethereum Staking

London is live on Ropsten. Why new Ethereum hard fork is important

Next month, the developers of the largest altcoin by market capitalization will release an update for the main network. How might this affect the prospects of a digital coin and its value? Let’s try to figure it out!

The first block has already been mined on the Ethereum — Ropsten testnet as part of the London update. It was tweeted by one of the developers. On the last day of June, the update is planned to be rolled out to the Goerli testnet, and on July 7, the hard fork will be released on the third test network — Rinkeby. After that, the update will be finally transferred to the Ethereum blockchain.

London is the next update of the Ethereum network as part of its transition to Ethereum 2.0. This is a solution that is going to scale the original blockchain and make it more user-friendly. The update’s main feature is the network’s transition to Proof-of-Stake (PoS) consensus; it is going to replace the Proof-of-Work (PoW) consensus, which the blockchain is currently running on.

One of the main differences between Proof-of-Stake and Proof-of-Work is that miners are no longer needed to keep the network running. Holders of digital coins ensure the “health” of the blockchain; they are also rewarded for this. This process is called staking. 

LATOKEN users always ask for new ways to participate in network rewards with their assets, and they are happy to please them. That is why LATOKEN is expanding its on-chain staking services. You can give it a try by following the link below.

About London

The update includes some suggestions for improving the network:

  1. EIP-3554 — delay in increasing the mining difficulty level until December 1, 2021;
  2. EIP-3541 — blocking smart contracts whose address starts with “0xEF”;
  3. EIP-3529 — reduction in gas refunds (the currency that is used in the altcoin network to pay commissions);
  4. EIP-3198 — changes the operation that returns the value of the base commission of the corresponding block;
  5. EIP-1559 — changes the mechanism for calculating the reward to miners, which they now receive for mining a block. Part of the reward will be burned.

There is such a thing as token or coin burning. The creators of digital coins destroy some of the emissions to limit the supply, thereby increasing the asset’s value. All token burning operations are recorded on the blockchain as a general transaction. That’s how anyone can verify that the coins have indeed been permanently withdrawn from circulation.

EIP-1559 can be called the most controversial proposal. It has been under discussion for about three years. When miners learned that EIP-1559 would be included in the London update, they threatened to hold a protest, which ultimately did not take place. Miners threatened to redirect their power to one mining pool in order to get 51% of the network hash rate and to be able to make one-way changes to the Ethereum protocol.

On June 24, the average transaction fee on the Ethereum network was about $2,96. This can be called the absolute minimum since December 2020. Over the past month, the size of commissions has decreased by 95%. In mid-May, the average commission on the Ether network was $69. After the crypto market collapse, miners earned about 44.2 thousand digital coins on May 19. This is the most significant daily miner earnings of all time. On this day, commissions for transactions in the Ethereum network in some cases rose above $1,3 thousand.

Renewal Prospects & Market Reaction

The London hard fork can be described as fundamental to the Ethereum blockchain as the update is intended to make transaction fees more predictable. Most likely, the level of commissions will be more evenly distributed across the entire volume of transactions.

It is unlikely to greatly affect miners’ income, especially since it is unlikely to lead to their decrease. But the income of those miners who artificially load the network to increase commissions is likely to suffer.

A slight decrease in fees may occur as a result of crowding out unscrupulous miners. If this happens, it can become an incentive for the growth of ETH quotations since users will see an increase in the efficiency of the ecosystem.

Together with the expectations of further successful updates within the framework of Ethereum 2.0, this could have a synergistic effect and contribute to the progressive movement of the altcoin price in the next couple of months.

Many experts are confident that the London renewal will not lead to a decrease in commissions. The hard fork actually does not have such a goal but aims to create the concept of “block elasticity” to increase the platform’s theoretical maximum capacity.

In addition, some experts are confident in the greed of unscrupulous miners. Any load on the network instantly raises the commission.

LATOKEN  does not provide investment, tax, legal or accounting advice. This article is written for informational purposes only. Like many other assets, cryptocurrencies are subject to high market risk. Please trade with caution.

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