In July 2021, there will be a big update for the Ethereum blockchain. It will completely change the system for calculating commissions within the network. Some of the fees that miners now receive as payment for processing transactions will be burned. The decision to include a related proposal (EIP-1559) in an upcoming system update was received March 5 at a conference of altcoin developers, writes RBC Crypto.
Ethereum creator Vitalik Buterin introduced the EIP-1559 update back in 2018. Since then, blockchain users have been arguing about its necessity. Right now the time is ripe for the implementation of the update due to the fact that users are not ready to pay record commissions for transactions within the network, which have reached $ 20, explained the head of the Six Nines data center Sergey Troshin. Situations could arise on the network when the transaction fee exceeded the size of the transaction itself.
Ethereum has already overcome a period of correction at the end of February, when the value of the digital coin dropped to a local minimum at around $ 1.31 thousand. Troshin believes that the cryptocurrency managed to recover amid news of the upcoming EIP-1559 update. He drew attention to how the quotes reacted to the news about the change in the system for calculating commissions. Over the weekend (March 6-9), according to Coingecko, Ethereum grew by 18.9%, from $ 1.53 thousand to $ 1.83 thousand.
The update will create a deflationary mechanism in the Ethereum network in connection with the creation of an asset shortage, says Sergey Khitrov, founder of Listing.Help & Blockchain Life. He recalled that the value of an asset increases many times with a decrease in supply and demand remains. Khitrov cited as an example the opinion of Ryan Berkmans from Predictions Global, who predicted rise in the price of Ethereum to $ 20 thousand after the update is implemented.
In his opinion, Sergei Troshin, the reduction in transaction fees will interest new market participants, but will reduce the profitability of miners serving the Ethereum network, since it will make block mining more difficult.
Caution does not hurt
Now the market is in a phase where traders grab any news that allows the price to move along the path of least resistance, explained the founder of the STASIS stable cryptocurrency platform Grigory Klumov. According to him, this signals a late stage of the bull market, when major players need to create a stir and close their positions. Therefore, Klumov considers the news of the introduction of the EIP-1559 update to be a short-term manipulation and advises not to flatter yourself.
“It should be understood that during the late bull market, you should not flatter yourself and run to buy ether because it will burn something – this offer is two years old,” Klumov added.
No threat of separation
The Block previously wrote that the EIP-1559 update split Ethereum miners. The largest mining pool of the digital coin Sparkpool (24% of the network hashrate) opposed the change in the commission calculation system. In turn, F2Pool (11% of the network hash rate) supported the update.
A similar situation happened in 2017 with Bitcoin. Then the network of the first cryptocurrency split, and its new Bitcoin Cash hard fork appeared. The problem of low transaction speed due to high network loads has divided the community of the flagship cryptocurrency into two camps. The first camp was convinced that the problem should be solved by creating a hard fork with a block size of 8 MB. Supporters of the second camp believed that the bitcoin block size should be increased to 2 MB without generating a hard fork.
In the current situation with the EIP-1559 update, the Ethereum community will not be divided, since the evolutionary development of the project is now taking place, and not revolutionary, Sergei Troshin believes. According to him, all Ethereum users understand why developers are implementing a token burning system.