Ethereum London Hard Fork — What will change?
Examining the 5 Ethereum improvement proposals on August 4, 2021.
The anticipated Ethereum London hard fork will launch on August 4, 2021. It contains five Ethereum Improvement Proposals (EIP) to improve the Ethereum network. How and why are these EIPs proposed in the first place? What issues do they solve for the Ethereum network?
What is EIP?
You would often hear phrases like EIP-1559. It is not that fancy. Each protocol number signifies the number of proposed changes for the Ethereum network.
EIP can be proposed by anyone within the community.
Yes, anyone who is involved in Ethereum can create an EIP proposal. The stakeholders of the Ethereum community will have the final decision to adopt it or not.
EIP was inspired by the bitcoin counterpart of Bitcoin Improvement Proposals (BIP). EIP is created to document improvements and changes of the Ethereum network.
EIP Improvements in London Fork
EIP-1559: Fee market change for ETH 1.0 chain.
EIP-1559 tries to solve the unpredictability of network fees. When user transacts ETH they can choose between “fast”, “normal”, or “slow” bids for their transactions. This is akin to making a bid to miner nodes.
The unintended consequence is that miners have incentives to serve the highest bid (“fast”). Results in crypto users paying a higher network fee for their transactions.
EIP-1559 introduces a minimum fee to be paid when a transaction occurs. This minimum network fee (base fee) fluctuates based on the number of transaction requests handled by the network.
If you want the transaction to be faster, you can incentivize miners by placing a tip. Miners only get to keep the tips of the transaction. Since the base fees get burned back to the network. This “burn mechanism” also acts as a deflationary mechanism for ETH (which has no supply cap, unlike Bitcoin).
Will EIP-1559 reduce gas fees? It depends. But it will for sure make ETH gas fees much more predictable.
EIP-3198: BASEFEE opcode
Directly related to EIP-1559 improvements. The BASEFEE opcode returns the value of the base fee at the current block to EVMs (computers that run Ethereum client). This allows smart contracts or DApps to get the value of the base fee immediately. EIP-3198 aims to allow DApps and smart contracts to improve their services.
EIP-3529: Reduction in refunds
EIP-3529 removes gas refunds for SELFDESTRUCT and reduces gas refunds for SSTORE.
Originally, gas refund SSTORE and SELFDESTRUCT were introduced. It is an incentive for developers to write applications that efficiently use storage and decrease redundant codes. It refunds of gas fee when the variable storage is reduced.
EIP-3541: Reject new contracts with the 0xEF byte
Existing smart contracts with 0xEF byte will remain but the new smart contract with 0xEF byte will be rejected.
To separate new contracts into a new byte sequence.
EIP-3541 upgrade is because of the implementation of EVM Object Format (EVMOF). To prevent Ethereum clients from the confusion between previous smart contracts that are not in EVMOF and new smart contracts in EVMOF format.
If the EVMOF proposal does not go through. EIP-3541 can be implemented on future updates that require it.
EIP-3554: Difficulty Bomb Delay to December 2021
Delay the increase in mining difficulty to December 2021. This difficulty upgrade is to make Ethereum mining less appealing. Encourages the network to move from ETH 1.0 proof of work to ETH 2.0 proof of stake mechanism.
EIP-3554 motive is to increase difficulty after the merge of ETH 1.0 and ETH 2.0. The merge is scheduled for the Shanghai upgrade in October 2021.
Key Takeaways
- EIP-1559 introduced Ether deflationary mechanism and makes network fees more predictable.
- EIP-3198 lets Ethereum client computers get the current value of the base fee.
- EIP-3529 reduces the exploit of the gas refund system and decrease junk data that clog the network.
- EIP-3541 requires new smart contracts to be different machine codes than the existing 0xEF.
- EIP-3554 delays mining difficulty bomb to December 2021 to match with the merge of ETH 1.0 and ETH 2.0
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