Much of the buzz leading up to the London hard fork, an Ethereum upgrade scheduled for the early hours of August 5, has centered on EIP-1559, a contentious code modification that will burn transaction fees, removing some ETH from circulation.
But those aren’t the only tokens that will be phased out as part of the London makeover.
Developers will no longer be able to use gas tokens like GST2 and CHI to secure reduced prices while deploying smart contracts.
London is made up of five different Ethereum Improvement Proposals, which are network modifications that have been presented, debated by developers and other stakeholders, and then incorporated into the code. EIP-3529 is one of them.
“How Ethereum works today is if you store data on Ethereum…when you remove that data from the network, you get a small gas refund back to the kind of incentivize people to clean up after themselves,” Tim Beiko, a core developer with the Ethereum Foundation, explained this month.
In essence, smart contracts—code that automates transactions for things like NFT purchases and asset swaps—are no longer required once a certain amount of time has passed, similar to how an aluminum can is no longer required after the drink has been consumed. Clean it up or destroy it, and you’ll get a refund on the gas — or, more broadly, the transaction expenses — you spent for it.
EIP-3529 eliminates the refunds.
According to Beiko, while refunds were a nice concept in theory, they were more typically utilized by developers to flood the network with “essentially trash data” by taking advantage of cheap gas fees on the network—which corresponded to times when the network was being used less. They’d get their money back when gas prices rose to their previous levels.
According to the GasToken initiative, which was launched years ago, gas tokens enable this process by acting as a “method of banking storage at low rates and releasing it at high values.” You can effectively spend less to deploy smart contracts by using these coins.
One of the tokens due to become obsolete, Gas Token Two (GST2), is currently going for almost $200 on the cryptocurrency exchange Bilaxy. It was above $600 as recently as early April, before EIP-3529 was added to London.
While the tokens will have no actual utility after next week, crypto marketplaces sometimes have lively markets for useless tokens. Yearn.finance, a DeFi system, produced a “totally worthless o supply token” with “zero financial value.” The YFI coin is now worth over $31,000 and is used to make protocol governance decisions.
“They will become useless after London,” Beiko said of gas tokens, “whether they go to [$]0 or not I certainly can’t say given how wacky these markets are sometimes.”