EIP-1559, which reduces the amount of ETH miners receive, will be included in the London hard fork.
The London hard fork, a planned upgrade to Ethereum, is now being tested on the test networks.
The Ethereum Foundation’s Tim Beiko said today that London, Goerli, and Rinkeby will all go live on the Ropsten testnet around June 24, followed by London, Goerli, and Rinkeby on July 7. (All dates are estimations and are subject to change depending on how long it takes to mine blocks.)
“A block will be set for the Ethereum mainnet after the upgrade has been successfully activated on these networks,” the blog post says. This should take place in July.
Five unique Ethereum Improvement Proposals (EIPs) will be implemented as part of the London upgrade, which are changes to the blockchain’s code that must be widely agreed upon by community members before being implemented.
The most contentious modification is EIP-1559, which affects how network fees function and how miners—the people who run the software that processes all transactions and mints new ETH—are compensated. EIP-1559 was first proposed by Ethereum developer Vitalik Buterin.
Currently, whenever someone transacts on Ethereum or interacts with a smart contract, they must choose a fee, which is essentially a guessing game. You can set a large fee to force a transaction through quickly, almost guaranteeing that miners would include it in a block. If you underpay (consciously or unintentionally), your transaction will most likely be delayed until miners are less busy with higher-paying transactions. Speed is critical in a number of situations, including when trading on Ethereum-based decentralized exchanges like Uniswap, where token prices fluctuate rapidly and traders lose money if they wait.
EIP-1559 will quadruple the capacity of blocks to address this issue.
“This means that blocks will most of the time have a ‘extra’ 100 percent capacity that may be filled with transactions. So long as a transaction has a charge greater than the BASE FEE and includes a tip for the miner, it will be included in the next few blocks.” (If the network is extremely congested, the current auction system will be used.)
The improved user experience is touted as a result of the increased transparency. Some miners, on the other hand, feel that it has harmed their experience. Instead of going to miners, that basic fee is “burned” (i.e. removed out of circulation) under EIP-1559. The goal is to turn ETH, which has a supply limit like Bitcoin, into a deflationary asset—or at the very least, create some “deflationary pressure.”
Less ETH in circulation could theoretically benefit miners by increasing demand and the exchange price for Ethereum, which miners will continue to get as a reward for each new block they create.
SparkPool, Ethereum’s largest mining pool, isn’t convinced and has spoken out against the shift. It stated in February, “The burning tx fee, as defined by EIP 1559, is a wealth redistribution from miner to holder. That is why so many people are in favor of it…. However, under the name of better UX, it is a dictatorship of the majority (in fact not). It’s a heist.”
It’s merely experimental “robbery” as long as London is just on testnets. However, the improvement is on its way.