The date is set.
The upgrade, called London after Ethereum’s Devcon 1 location, includes the famous improvement proposal. EIP-1559, as the upgrade is labeled, will go live at block number 12,965,000. The launch date is expected to be August 4.
EIP-1559 will change Ethereum’s fee model so that each block will have a set “BASEFEE,” which users will pay as part of a transaction cost called gas, to perform an action on the blockchain. Actions range from simple transfers, to deposits in a lending platform. The fee change contrasts with the current model where users must outbid each other in what is called a first-price auction.
The proposal has high expectations. Eric Conner, a co-author of EIP-1559, anticipates that it will save 90% of transaction costs, improve the UX by automating the bidding system, and enshrine the economic value of ETH at the protocol level.
The lack of predictability and transparency in the transaction fees has pushed the onus on users or wallets to choose the gas price. This has led to a wide range of fees paid per block as users overbid to have miners choose their transaction. “Many users often overpay by more than 5x,” according to a Conner blog post. The discrepancy stems from a lack of something like BASEFEE, which allows users and wallets to approximate what others will be paying.
EIP-1559 will make transaction fees predictable block-to-block, allowing wallets to abstract away the annoying aspect of selecting transaction speed or allowing for custom gas fees which have led to so much waste.
EIP-1559 also makes it so the Ethereum protocol burns the BASEFEE, setting up the possibility that ETH will become a deflationary asset if the burns outweigh the ETH block rewards. Those go to miners who add the next block to the chain. A burn means code will send ETH to an uncontrolled address, permanently removing the tokens from the supply.
Users will still send a tip to miners if it’s important to get the transaction in soon.
The BASEFEE burning aspect has particularly captured the imaginations of Ethereum enthusiasts. There’s a website called watchtheburn where users can see ETH go up in smoke on the Ropsten testnet, where EIP-1559 has already been implemented.
As EthHub co-founder Anthony Sassano, tweeted — the protocol’s “scarcity engine is about to be unlocked.”