What impact will the Ethereum London Hard Fork have?
The Ethereum London Hard Fork is an eagerly awaited upgrade that will move the network further towards Ethereum 2.0. The upgrade should take place at Ethereum block height 12,965,000, or approximately the 5th August 2021 at 2.25 PM CET.
SwissBorg will support the upgrade and the hard fork.During this time and for a short time after, we will be suspending deposits and withdrawals for ETH and ERC-20 tokens from 12:30 PM CET whilst we verify everything works as expected for our users. User funds will be kept safe until we resume services. We will contact all SwissBorg app users directly with more information closer to the time.
What is the Ethereum London Hard Fork update?
The Ethereum London Hard Fork is an update to the Ethereum network. As mentioned earlier, it will move the network closer to Ethereum 2.0, also known as Serenity. Ethereum's community started Project Serenity to overcome the issues of high gas fees as well as improving the time and capacity of transactions.
The Ethereum Foundationwants to improve by moving from the current Proof of Work (PoW) consensus towards Proof of Stake (PoS). Ultimately, once sharding is introduced in the final phase, it is expected that Ethereum 2.0 will have enhanced transaction throughput and reduced transaction times and gas costs.
(New to Ethereum? Discover what Ethereum is and how it works.)
What are the key changes of the London Hard fork?
Ethereum allows anyone to submit changes to the Ethereum protocol. These changes might include adding additional features or changing how contracts work on blockchain functions, and are known as EIPs or Ethereum Improvement Proposals.
The EIPs included in the London Hard Fork include:
- EIP-1559 - making Ethereum less inflationary
- EIP-3198 - improve the user experience of smart contracts
- EIP-3529 - reducing refunds that had no impact
- EIP-3541 - making future updates easier
- EIP-3554 - defusing the difficulty bomb
EIP-1559: Making Ethereum less inflationary
The EIP-1559 proposal makes adjustments to the Ethereum network by exchanging certain gas prices based on their use case and cost over time - with this change, it hopes to develop a fairer fee market in which users can more easily predict costs and adjust their usage accordingly.
EIP-1559 introduces a base fee to each block the protocol dynamically extracts or expands, depending on how busy the network is. The fixed-per-block network fee will be burned, which makes Ethereum less inflationary.
Miners will only keep the priority fee as long as the PoW approach still exists, the base fee is always destroyed by the protocol.
EIP-3198: Improving smart contract UX
EIP-3198 is meant to improve the user experience of smart contracts by adding an operation code (opcode) that gives the EVM (Ethereum Virtual Machine) access to the block’s base fee.
The base fee is a small amount of Ether paid for each block created which can help with gas efficiency and reduction in transaction costs. Some applications will be able to use this fee, and other applications may choose not to use this opcode in their smart contract code if they do not need it.
This improves the user experience of smart contracts by increasing the security for state channels, plasma, optimistic rollups and other solutions that prevent fraud.
EIP-3529: Reducing impact-less refunds
EIP-3529 reduces gas refunds for certain smart contract operations on the Ethereum network. It lowers the refunds to eliminate current exploitations of the refund mechanisms.
The amount of gas used in a block can be up to twice the amount of its gas limit, because of these refunds. Eliminating this undesirable side effect will improve the spikes in gas on the network. This will overall improve the limit of gas fees for all users of Ethereum.
EIP-3541: Making future Ethereum updates easier
The goal of the EIP-3541 is to create some future space to create novel forms of smart contracts. Code that starts with the 0xEF Byte will not be allowed in the network anymore. This doesn’t affect existing code, but enables it to use byte sequences that do not exist in any existing smart contracts.
It allows clients to check for protocol changes and provides a clear guide for developers regarding breaking changes.
This system does not solve all the problems associated with software updates but it provides a reasonable solution for some commonly encountered obstacles and should cause significantly less disruption when introducing breaking changes.
EIP-3554: Defusing the difficulty bomb
The difficulty bomb will make Ethereum so difficult to mine, it will stop being viable for mining at one point. In fact, this is necessary to update the network to change from PoW to PoS. The developers introduced the difficulty bomb to transition away from mining towards staking.
EIP-3554 delays the effect of the difficulty bomb until December 2021 providing more time for developers to switch to Ethereum 2.0.
ETH London Hard Fork: Key takeaways
- Ethereum’s London Hard fork will decrease gas fees and burn a portion of those fees to make Ethereum more deflationary
- The updates will provide a better smart contract user experience
- Future updates of the network will become easier with the new proposals
- The network delayed the difficulty bomb to provide more time for the transition towards Ethereum 2.0.
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