London, the Ethereum update, is due to take place on August 5, 2021. Very ambitious, London will solve many problems on the blockchain. But some minors are against its implementation.
On the official Ethereum website, we are greeted with a banner and a countdown, displaying the hours that have passed. ” The London version is coming in 22:34! Can we read next to the countdown and a confetti emoji. It should be deployed during the day of August 5, exactly at 12,965,000th block.
London is the next update of the Ethereum blockchain, one of the most anticipated, and also one of the most ambitious. But in addition to many technical improvements that have been requested for a long time, London also brings its share of new features. And they don’t appeal to everyone.
It is important to make it clear from the start that London is a hard fork – that is to say a change in the operating rules, which will impact the future of the blockchain in a significant and irremediable way. It is also essential to indicate that London is not Ethereum 2.0: the passage of a consensus protocol of the proof of work to the proof of stake does not yet have an official date. Nonetheless, Ethereum indicated that researchers on the project were moving fast, and that “ The Convergence would take place earlier than expected », Before the end of the year 2021.
To better understand the issues facing London, it should be remembered that the Ethereum blockchain is widely used, whether for NFTs, or for the execution of smart contracts. These many uses mean that the number of interactions on the blockchain is high: there are between 10 and 30 per second on Ethereum, against between 3 and 7 transactions per second on the bitcoin blockchain.
However, the blockchain is struggling to meet all the requests, which are more and more numerous. This is particularly why the price of gas fee, fees that apply for each transaction recorded on the blockchain, have been increasing gradually for years. At Numerama, we ourselves had to pay these particularly unpleasant gas costs when we did our NFT (and it is largely because of these gas costs that we lost 150th).
For miners, who receive these gas fees in exchange for validating transactions on the blockchain, the rise in prices is very good news. But for all other people, and particularly those who use the blockchain to develop applications, gas fees have become a real economic burden. The problem became such that some competing smart contract blockchain projects arose, such as Solana, and many Ethereum users preferred to leave. In order to remedy this problem, an EIP (Ethereum Improvement Proposal, improvement proposal for Ethereum, editor’s note) has been submitted.
EIP 1559, in the heart of London
EIP 1559 has been accepted, and is one of the most significant changes London will make. It plans to modify the operation of the amount of gas fees, so far calculated according to the number of transactions in progress on the blockchain. It will now be calculated according to a different model. There will be a base price (called a base fee), which users will be forced to pay, and which will vary depending on blockchain congestion, but in a precise and predictable manner. To this base price can be added a kind of tip, which users choose to pay or not depending on how quickly they want their transaction processed. Some experts estimate that the price of transactions would drop by 90%.
The EIP 1559 also makes other changes. As we already explained a few weeks ago, the update will also introduce the practice of coin burn in the blockchain. Coin burn is a practice of deliberately destroying cryptocurrency units, all in order to increase their value. From the moment London is set up, the base fee that users will have to pay will be systematically destroyed. With each transaction on the blockchain, therefore, ETH will be burned. As a result, less ETH will be produced each year from now on – which is similar to the halving technique used by bitcoin – and which should go a long way in increasing the value of the cryptocurrency.
The other novelties
London does not stop at the changes introduced by the EIP 1559, although they are the ones that have the most impact on the blockchain and how it works. London also includes the following EIPS:
Why do some minors hate London?
Raising the value of ETH by introducing the burn coin, lowering gas fees, and enabling the development of new smart contracts is very good news for blockchain users and investors. But, for minors, this is not necessarily the case, and for a very simple reason: the drop in the price of gas fees.
The update will indeed radically change the way minors are paid. And since the announcement of the arrival of London and the 1559 EIP a few months ago, scores of miners have publicly announced their discontent – sometimes threatening to strike. Thus, SparkPool, one of the largest groups of ETH miners and which owns 24% of the hashrate, said on Twitter that he opposed the establishment of EIP 1559, as did Flexpool, who launched a campaign against London.
Sparkpool opposes EIP-1559. https://t.co/6pw7QNN2Ug
– SparkPool (@sparkpool_eth) February 25, 2021
Their dissatisfaction could have serious consequences: this is what happened in 2017 to bitcoin, whose blockchain was split in two following a disagreement between miners.
The developers in charge of the project have however been reassuring in recent months. Asked in January by the specialized media Coindesk, Tim Beiko, the developer in charge of London, explained that a disaster scenario was unlikely. ” It would take a group of minors representing at least 51% of the hashrate to prevent the update “, He had indicated in particular.
It remains to be seen what the miners will do. Less than 24 hours before London, on Twitter and social networks, reminders about the update are legion: minors must indeed perform an operation on their computer in order to continue mining with London. The answer should not be long.