The long-awaited Ethereum London upgrade is nearing with the hard fork launching on testnet before its full deployment next month.
The upgrade will herald the implementation of the highly anticipated EIP-1559 modification that will alter the Ethereum transaction fee calculation mechanism.
In the early hours of June 24, lead developer Tim Beiko tweeted that the first block has been produced on the Ropsten testnet.
“We have a block! Took a bit longer than expected, but London is live on Ropsten,”
The next phase in the London hard fork rollout is deployment on the Goerli testnet which is scheduled for June 30. Following that, it will be launched on the Rinkeby testnet on July 7, and finally, the upgrade will be rolled out on Ethereum mainnet later in the month.
The big question on the lips of anyone that has used Ethereum over the past six months is: will there be any reduction in gas fees?
At the time of press, the average transaction fee on the network was around $3.50 according to BitInfoCharts. This is way down from its all-time high of $70 (average) in mid-May but still too expensive for practical use and smaller transaction amounts.
Unfortunately, London and EIP-1559 will not result in a massive reduction in gas fees as confirmed by Ethereum software solutions provider ConsenSys:
“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.”
The EIP-1559 will change the current fee auction mechanism by eliminating the first-price auction as the main gas fee calculation. Under the new mechanism, there will be a discrete “base fee” for transactions to be included in the next block. Users or applications that want to prioritize their transaction can add a “tip” to speed things up a little.
The base fee will dynamically change depending on how full the block is at the time of the transaction. This will allow dapps, wallets, and protocols to automatically set lower and more accurate gas fees.
The major upside is the deflationary change to Ethereum’s economics that the EIP will bring by burning the base fee. EthHub founder Anthony Sassano shared a tool to view how much ETH was being burnt on the testnet.
Ethereum prices continue downwards
ETH prices have continued their downtrend with no positive price momentum coming from the approaching upgrade.
At the time of writing, ETH was trading down 4.4% on the day at $1,923 according to CoinGecko. The asset has plunged 19% over the past seven days and is now down 56% from its mid-May peak.