EIP-1559 Test is about to start! Hold tight your ETH before the ETH deflation arrives

The highly anticipated Ether “London” upgrade has been developed on the testnet. The upgraded version will first be activated on the Ropsten testnet with a block height of 10499401 and is expected to take place on June 23, 2021.

Included in this upgrade is the much-anticipated EIP-1559 proposal.

EIP-1559 is one of the most important but also most controversial changes on the Ethereum blockchain since the separation of Ethereum and Ethereum Classic in 2016. It will bring some changes to the way fees are set and distributed on Ethereum.

Currently, users pay Gas fees to miners to incentivize them to include their transactions in the block. In the process, miners who want to maximize their profits will choose to package transactions with higher Gas fees. If a user’s fee is set too low, other users may bid a higher price, thereby leaving that user’s transaction in the pool until it expires and is canceled. This can lead to unpredictable and erratic fees during periods of high usage.

According to EIP-1559, the new model will set fees based on network usage with a variable ‘base fee’ that will be burned and only an optional tip will be handed over to the miner. The base or minimum fee is set automatically by the Ethereum Protocol based on usage and demand. It is designed to achieve 50% network utilization by fluctuations of base fees.

Some estimate that EIP 1559 will significantly reduce net issuance and deflate ETH.

The EIP-1559 was previously resisted by Ethereum miners, who believed it levied some of the revenue from miners without putting it to use and simply burned it.

After DeFi gets popular, transaction fees for miners’ income have been on the rise, once reaching a level comparable to block rewards of over $1 billion. It is unsurprising that miners will protest.

Although EIP-1559 seems to directly lead to lower income for Ethereum miners, in the long run, it will improve the performance of the Ethereum network and user transaction activity, from which miners can profit.

Likewise, if ETH goes into a deflationary model as expected, then the value of ETH will increase as well. Therefore, if the value of ETH is bullish in the long run, miners need not worry about lower fee income.

Once EIP-1559 is implemented in July 2021, base fees will be burned. This will result in a significant decrease in ETH net issue rates, which, on the demand side, has been a major contributor to the rising and record-high ETH price in April and May 2021.

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Hash-mining is a resilent and robust method for obtaining #ETH. The emergence of #EHash has provided the market with a new vehicle to participate in ETH mining.

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Hash-mining is a resilent and robust method for obtaining #ETH. The emergence of #EHash has provided the market with a new vehicle to participate in ETH mining.

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