August 5 was D-day for Ethereum’s London hard fork and saw its price remain strong following a 12-day winning streak. The long-anticipated upgrade will bring improvements to the efficacy of transactions on the network until Ethereum 2.0 is deployed in 2022.
Ethereum has gone live with some significant changes to its network. Five Ethereum Improvement Proposals (EIPs) are under way, the most notable being EIP-1559.
Saving on Transaction Fees
EIP-1559 is said to lower the transaction fees on Ethereum, but this is not entirely true. EIP-1559 will not so much lower the transaction fees as allow a better gauge of the actual transaction fee.
Users will no longer need to ‘cushion’ transactions with extra gas to ensure that miners process the transaction, allowing users to estimate the transaction cost more precisely and thus pay less. A developer at the Ethereum Foundation, Tim Beiko, has gone on to clarify that the cost will not be a “20x reduction” but instead a “20 percent reduction”.
‘Ultra-sound’ era
The London Hard Fork has introduced a deflationary model for Ether (ETH), with EIP-1559 setting the scene for what some have called an ‘ultra-sound’ era for Ethereum.
EIP-1559 will be destroying a large part of the high mining fees on Ethereum. The London hard fork means that transaction fees once paid to miners will now be burned and removed from circulation altogether.
The move has promoted Ethereuns to speculate that this will lead to a supply crunch as more of the coin is removed from circulation. Along with a decrease in supply, DeFi and NFTs within the Ethereum ecosystem increase the demand for Ethereum, so it is expected that the price of ETH will continue to rise.
The price has remained relatively stable following the London hard fork going live, with a drop of 0.14 percent in the past 24 hours. This follows a winning streak of 12 consecutive days and a price gain of 43 percent.
It remains to be seen if the price of Ethereum has risen and will continue to rise due to a greater demand for the cryptocurrency.
By Jana Serfontein, Crypto News Australia Guest Author
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