Ethereum EIP-1559 Upgrade approaching as Hard Fork Launches on Testnet

Ethereum's EIP-1559 Upgrade Now Deployed on All Testnets

The long-awaited upgrade from Ethereum is approaching with the hard fork launching on Testnet before being fully deployed next month.

The Hard Fork Produces First Block on the Ropsten Testnet

The upgrade will herald the implementation of the highly anticipated EIP-1559 modification, which will change the way in which Ethereum transaction fees are calculated.

In the early morning of June 24th, lead developer Tim Beiko said on Twitter that the first block in the Ropsten testnet had been generated.

“We have a block! Took a bit longer than expected, but London is live on Ropsten,”

The next phase of the London hard fork is due to be deployed in the Goerli testnet on June 30th. After that, it will be launched on July 7th on the Rinkeby testnet, and finally, the upgrade will be started on the Ethereum mainnet later within a month.

Will Upgrade Reduce Transaction Fee?

Everyone who has used Ethereum in the past six months has raised one big question: will gas costs be cut?

According to data from BitInfoCharts, the average transaction fee on the network is about $3.50 at press time. This is well below the all-time high of $70 (average) set in mid-May, but it’s still too expensive for actual usage and small transaction amounts.

As the Ethereum software solution provider ConsenSys, London and EIP-1559 have confirmed, gas costs will unfortunately not be reduced significantly:

“This is not the intent of the EIP. As a side effect of a more predictable base fee, EIP-1559 may lead to some reduction in gas prices if we assume that fee predictability means users will overpay for gas less frequently.”

EIP-1559 will change the current fee auction mechanism and remove the first-price auction as the main method of calculating gas fees. According to the new mechanism, a discrete “basic fee” is charged for transactions that are contained in the next block. Users or applications wishing to prioritize transactions can add “notes” to speed up processing.

The basic fee changes dynamically according to the fullness of the block at the time of the transaction. This allows dapps, wallets and logs to automatically set lower and more accurate gas charges.

The main benefit is that EIP will bring deflationary changes to the Ethereum economy by burning up the basic fees. EthHub founder Anthony Sassano shared a tool to see how many ETHs were burned in the testnet.

Ethereum Upcoming Upgrade Brings No Positive Move on Price

The ETH price continued to fall, and the upcoming upgrade did not bring positive price momentum.

According to data from CoinGecko, at the time of writing, ETH fell 3.18% to $1,930. The asset has fallen 19% in the past 7 days and is now 56% below its high in mid-May.

Disclaimer: The information in this article should not be considered financial advice, and FXCryptoNews articles are intended only to provide educational and general information. Please consult with a financial advisor before making any investment decisions.

Share this :