The Ethereum network’s recent upgrade will make the transaction fee structure more predictable
The Ethereum network activated the London hard fork yesterday, moving it an inch closer towards migrating to a Proof of Stake protocol. The upgrade is a huge deal for the Ethereum network as it addresses a key problem on the blockchain.
The London fork is designed to make the fee structure on the Ethereum network more predictable. Although the cost of using the Ethereum network hasn't lowered with this upgrade, it makes it easier to predict.
The activation yesterday came after months of hard work, and it involves one of the five Ethereum Improvement Protocols (EIPs), called EIP-1559, which make up London. The goal of the EIP-1559 upgrade is to make life easier for Ethereum network users.
Currently, Ethereum users bid how much they are willing to pay for their Ether transactions to be completed by a miner. In most scenarios, this process is expensive and has pushed some users away from the network.
However, thanks to the London upgrade, the process will be handled by an automated system. The Ethereum blockchain will have a set fee amount that will fluctuate depending on network congestion.
Nic Carter, Castle Island Ventures' general partner and Coin Metrics co-founder, told CNBC that "It adds a lot of complexity to the fee logic, but it's an interesting approach that could potentially stabilize the fee dynamics."
The London hard fork is basically designed to create an ecosystem that encourages lower gas fees. This is important because one of the biggest problems with the Ethereum network has been its high gas fees, especially during periods of massive congestion.
Ethereum users might not need to worry about miner fees for much longer. The developers are working on moving the network from the current Proof of Work protocol to a Proof of Stake one. This will eliminate miners from the network and improve some aspects such as scalability and high transaction fees.