This upgrade to the network will allow operators to conduct more transactions and pay lower fee costs for mining. The burning of the base fee amount will decrease the supply of ETH as well as miners’ income.
The community has been preparing for the launch of ETH 2.0, the new version of the Ethereum network. That update promises to fix the serious scalability problems that Ether (ETH) faces daily.
Since this process will occur in stages over several years, everything must be ready for the upcoming hard fork. Ethereum developers hope that it will reduce fee costs on the network.
This Ethereum Hard Fork Will Allow Going from the Proof-of-Work (PoW) Method to the Proof-of-Stake (PoS) Method
The Ethereum update is one of the few momentous changes in the history of the crypto world. This is not just a routine improvement to the cryptocurrency’s network but a fundamental change in its operation. It will make it possible to go from the Proof-of-Work (PoW) method, which Bitcoin also uses, to the more modern Proof-of-Stake (PoS) method.
This change seeks to end the Ethereum scalability problems, allowing validators to conduct more transactions. The decrease in bottlenecks on the Ethereum network will lead to faster transactions and lower mining fee costs.
However, this is a very radical change in what has been its operation to date. For that reason, the implementation of ETH 2.0 is happening in stages. At present, a parallel blockchain within Ethereum already works with PoS while the main chain still uses PoW. This is a relevant step in the merging process of both chains on July 14th with the upcoming Ethereum hard fork London.
The London Hard Fork Mainly Seeks to Attack High Transaction Fees
The London hard fork will be a crucial moment in the upgrade process of Ethereum. However, that event will not lead to the expected merger of ETH’s transaction validation methods and the use of the PoS method. This hard fork will make it possible to start attacking the main problem that Ethereum currently faces: high transaction fees.
Following the implementation of this hard fork, the management of fee costs on the Ethereum network will be available. This stage will include the establishment of a base fee amount, which will burn later. That will decrease the supply of ETH in the market, as well as the income of miners, prompting them to migrate to the PoS method as soon as possible.
London is not the only change proposed for the Ethereum network right now. For example, the EIP-3238 improvement proposal would delay the “difficulty bomb.” This is an increase of at least ten more months in mining difficulty to incentivize PoW miners to migrate to PoS. However, at the moment, none of these improvement proposals have received approval as London did.
The solution to the Ethereum scalability problems and the reduction in fee costs are the most important objectives of this hard fork. The community hopes that the transition from the PoW method to the PoS method will help them conduct more transactions.
By Alexander Salazar
