London Hard Fork Expected to Boost ETH’s Price by Ushering in EIP-1559

The highly anticipated Ethereum (ETH) hard fork upgrade code-named London is scheduled on the ethereum network on Thursday, according to the countdown on Ethereum.org. 

The primary improvement in this hard fork will be a change in how transaction fees work. But, unfortunately, it will also start to destroy coins to trim the pace at which the supply of Ether tokens grows.

The upgrade EIP-1559 will ultimately affect how the network handles transaction fees. The move will make transaction fees more predictable, improving the network’s efficiency.

Token Burning

The revamp will split about 13,000 new Ethers issued each day for miner payment “gas fees” into three parts. First, the minimal or base fee that users pay to process transactions will be eliminated from circulation in a process called burning.

KYC and Audit Solutions For Every Project!

Token burning is a strategy where miners usually send the tokens to unique addresses with inaccessible private keys. No one can use the tokens without access to a private key, putting them outside the circulating supply. Downsizing the number of tokens makes the remaining currencies in circulation rarer and more valuable.

Conquering Inflation

Matthew Hougan, Chief Investment Officer at Bitwise Asset Management, pointed out that EIP-1599 aims to reduce ether’s general inflation rate by roughly 1% a year. He noted that the estimate is about half a considerable reduction compared to bitcoin “halving” events.

According to a post from the Ethereum Foundation in July, the London fork will also establish other EIPs, like EIP-3541.

Coins. Ph will implement a maintenance period for transacting ETH, USDC, LINK, and KNC to ensure the safety of your funds during the upgrade on August 5, 2021, at 5:30 PM (PHT). Once the upgrade has been finalized, and the Ethereum network is stable, the platform will re-enable these services.

Mainstream Adoption

Ethereum has emerged as the leading financial infrastructure despite bitcoin being the preferred store of value in the digital ecosystem. According to a Grayscale report released in February, ETH now settles over $12 billion daily transactions.

The improvement will ease investors’ understanding of the value of holding ether. Hougan said EIP 1559 would lead to a rise in transactions on the Ethereum network. The platform aims to raise the use of ether, which will possibly bring a wave of institutional investors into the market.

Btc

Bitcoin

$27.921
price

0.523%
price change

TRADE NOW

EIP-1559 is insignificant compared with ethereum 2.0 – a network reformation while infrastructure developers hope it will be complete by early 2022. Ethereum 2.0 will change the network from a “proof-of-work” system to a “proof-of-stake” system.