Ethereum Testnet Burns ETH Before EIP-1559 Launch

Ethereum, Ethereum Testnet Burns ETH Before EIP-1559 Launch
Image by WorldSpectrum from Pixabay

Yerevan (CoinChapter.com) — Ethereum’s much-awaited London hard fork has launched on the Ropsten test net on June 24. This is in preparation for the Mainnet launch in July.

Ropsten Ethereum, also known as “Ethereum Testnet,” is a testing network that runs the same protocol as Ethereum does. The network is used to test protocols before deploying them on the main network, known as the Mainnet.

However, the Ropsten test net will not be the only platform to host the proposed protocols. The next phase will see more protocols tested on the Goerli testnet on June 30. Following the launch on Goerli, the company will launch more on the Rinkeby testnet on July 7. It will then launch these on the main network after passing them through the tests.

The testing has begun in anticipation of the launch of Ethereum London Hard Fork.

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Ethereum London Hard Fork: What is it? 

The Ethereum London hard fork updates the Ethereum network that changes the blockchain’s transaction fee model and difficulty time bomb. After the upgrade, the Ethereum network will set transaction fees with a fixed base fee for each block. Currently, biddings on gas prices determine the transaction fees.

Ethereum’s transaction fee system has long been a subject of contention. Because the network hosts the vast majority of decentralized finance (DeFi) and non-fungible token (NFT) projects, it has become very congested, resulting in slow transactions and high fees.

Unfortunately, this has also resulted in Ethereum losing out to new competition due to low processing fees and faster transactions. 

The average transaction fee on the Ethereum network is around $3.50. Although this number is down from its all-time high of $70 (average) in mid-May, it still too expensive for everyday use, especially for smaller transactions. 

However, according to Ethereum software solutions provider, ConsenSys London hard for and EIP-1559 will not result in a massive reduction in gas fees, 

This is not the intent of the EIP. However, as a side effect of a more predictable base fee, EIP-1559 may lead to some reduction in gas prices if we assume that fee predictability means users will overpay for gas less frequently.

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Preparing for the Launch of London Hard Fork

The Launch of the London hard fork will also bring in the part of the much-awaited EIP-1559 mechanism.

Other than changing the fee auction structure, the mechanism is set to burn the “base fee” to help deflate the transaction fee over time. This is in anticipation of the launch of Ethereum 2.0 (“Serenity”), which will improve the speed, efficiency, and scalability of the network. The upgrade will take Ethereum to new heights, enabling it to handle more transactions by alleviating congestion and high gas costs.

The Ethereum testnets have already started burning high numbers of Ethers prior to the launch of EIP-1559.

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No Positive Effect On ETH Prices 

Ethereum prices stumbled despite of the launch. Credit:-CoinGecko
ETH prices stumbled despite of the launch. Credit:-CoinGecko

At the time of the launch of the test platforms, Ether gained a humble 4.2%. However, the price of ETH plummeted for the rest of the day, indicating that the launch failed to affect the prices positively.

Maybe it will take longer for Ethereum’s in-house token to benefit from the latest developments.

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