On August 5, the London update will be released on the network of the largest altcoin by capitalization, which will completely change the mechanism for calculating transaction fees. How this will affect the digital coin and its users
On August 5, a London hard fork will take place on block 12,965,000 on the Ethereum network, which will be another step in the transition of altcoin to protocol 2.0. According to the information on the Ethereum Foundation website, the network update will take place at 15:11 Moscow time.
Ethereum 2.0 will allow the original blockchain to scale and make it more user-friendly. The main feature of the update is the network's transition to the Proof-of-Stake (PoS) consensus – it will replace the Proof-of-Work (PoW) consensus, which is currently running the blockchain.
The main difference between PoS and PoW is that miners who generate computing power are not needed to maintain the PoS network. The health of the blockchain is ensured by the holders of digital coins and are rewarded for this.
What the update will change
The London hard fork includes five network improvement suggestions:
- EIP-3554 – delay in increasing the mining difficulty level until December 1, 2021;
- EIP-3541 – blocking smart contracts whose address starts with "0xEF";
- EIP-3529 – reduction of compensation for gas (the currency that is used in the altcoin network to pay commissions);
- EIP-3198 – changes the operation that returns the value of the base commission of the corresponding block;
- EIP-1559 – changes the mechanism for calculating the reward to miners, which they now receive for mining a block. Part of the reward will be burned.
The most important proposal is considered EIP-1559, which will completely change the system for calculating transaction fees. Before London came out, commissions were paid in the auction format, that is, miners first of all performed transactions with the highest commission.
After the hard fork, each block will have a fixed fee, which will depend on the network load and demand. This will lead to the fact that users will no longer need to independently calculate and set commissions. London will also introduce the ability to tip miners for faster transactions.
Another important proposal is EIP-3554, which postpones the activation of the difficulty bomb until December 1. This mechanism was introduced by the developers so that after the transition to Ethereum 2.0, the complexity of mining increased several times, making the mining of cryptocurrency unprofitable. This is how the developers want to motivate miners to switch to staking.
What users should do
Centralized and decentralized exchanges will automatically migrate to the London hard fork, so users don't need to take any further action.
After the update is released, Ethereum developers advise users to update their wallets (Geth, Openethereum, Besu or Nethermind) to the latest version.