Moni Talks EN
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Moni Talks EN

🎡 London is the capital of Ethereum 🎡

A new bullrun is just around the corner. Can the UK capital bring it closer? Will the miners starve to death? Is Moni Talks opening its own university? Waaaat??? So, keep calm and let’s go!

Ethereum is the second most capitalized and popular cryptocurrency, constantly trying to become More Enduring, Better, Faster, Stronger through its upgrades. In short, first ETH wants to be the first in capitalization and popularity :)

And today, I’m going to talk about the nearest and significant update to the Ethereum network… London!

By the way, some sources call London a hardfork, but that’s not quite true. Hardfork is a change of old rules and cancellation of old software support; these actions could be easily called “creation of new cryptocurrency” because the network is divided into two parts. Example: Ethereum Classic and Ethereum. The difference is that Classic operates under the old rules and is not updated.

On the other hand, London and past updates have also been called hardforks, as the rules on the network change drastically and prevent playing by the old ones. So, such a dilemma: London is not a hardfork, but not that by hardfork is not a hardfork, but essentially a hardfork!

Why do we need Ethereum updates? It’s simple — they are gradually leading our beloved cryptocurrency towards Ethereum 2.0 Serenity. It will bring a lot of cool stuff to the network, which we’ll cover next time.

0) May I have a menu, plz?

We’re at Moni University, not a restaurant, but here’s a clickable menu for you to quickly navigate.

I would advise you not to skip it :)

1) Hello, my name is…

2) What London includes?

3) Let’s discuss EIP-1559!

How does it work?

What benefits?

Any snags?

4) Will London change the market?

5) Sources…I need sources!

1) Hello, my name is…

Hi! I’m Hoodie Boy! I’m a real Degen, a Moniversity professor, and your guide to the crypto basics. There will be no misunderstood or complicated terms in this column (I’ll tell you a secret: even the people who make them up to don’t understand them). I will explain the most complicated things in the simplest of words. By the way, along with cute pics :)

Why do you need to know the basics?

First, it will be perfect for your portfolio in the long run, as you will be able to conduct a fundamental analysis of your investments. It’s never too late to start getting into crypto.

Secondly, a basic understanding of the fundamentals will help you understand why the market behaves in a certain way and what may change in the future. You will make better decisions and save your capital if you know the protocol thoroughly, understand how the network works, what the key players in this market are, and so on.

Third, you become a conscious revolutionary who will overthrow fiat money sooner or later. Being part of the big story is cool. Watching the Wild West and taking part in it is interesting and fun.

Fourthly, being a poser sucks.

🕊 Welcome to Moniversity 🕊

2) What London includes?

The coming update includes 5 proposals. Each proposal is called by the formula “EIP + some number.”

EIP stands for Ethereum Improvement Proposal, but what are the numbers after that and why exactly they are there — dunno :(((

Why exactly are these movements called proposals? Because EIP is when a community of developers proposes some improvement which is then reviewed by the core developers.

So, let’s quickly go through each one:

  • EIP-3554 — this dog is needed to keep miners from dying, as it delays the level of increase in mining difficulty until December 1, 2021. What will happen to the miners on December 2? They will go to McDonald’s! Or to the factory… To learn the real meaning of the word “iron.”
  • EIP-3541 — blocks smart contracts whose address starts with “0xEF”. Why? I don’t know, but developers said that something could go wrong there, and if anything, they will roll it back.
  • EIP-3529 — reduces gas compensation. Wat? It’s not really so important. It is more important to know that originally developers have chosen the high gas compensations for good intentions. Still, over time the disadvantages have become apparent, which far outweigh the pluses.
  • EIP-3198 is simply an addition to EIP-1559. It simply adds a BASEFEE operation code, which returns the values of the basic unit charge. Huh? Mostly it’s to increase security so that scammers share the fate of miners and go to the factory or McDonald’s.
  • EIP-1559 is the most important and interesting proposal. It is needed to change the rewarding mechanism for miners and reduce the cost of gas.

Also, a deficit will start to be created by burning as the issuance of new coins will start to decrease. If the number of coins on the market decreases, the value of the coins will increase; savvy?

Whether there will be huge queues on our streets for such a gimmick aka ETH… but I have an optimistic view!

3) Let’s discuss EIP-1559!

Of course! This proposal is really worth your attention, as it is one of the most anticipated and controversial (for you-know-who) innovations in the entire 6-year history of the network.

One of the main reasons that are preventing Ethereum from scaling is the huge gas. It works this way: lots of people using -> lots of transactions per second -> you have to pay the miner more.

At peaks, the commission can be as high as $500. Yeah, for the crypto world during bullrun, it’s pennies, but still, imagine paying $500 to drop money on a friend’s card. It puts many people off, especially those new to the cryptocurrency world (🐹).

Consequently, many developers move to alternative blockchains, such as Solana, Binance Smart Chain, Polygon, and others. And the outflow of devs is not good for the infrastructure of our beloved Ethereum.

How does it work?

It used to be that miners could choose whose transaction to take. Accordingly, they took into block those people who offered more $$$. This spawned gas wars, where the supply for anything is limited, and you need to get into the block before the other person does. Also, it spawned the aforementioned huge commissions as demand (want to get on the block 🥺👉👈) exceeded supply (not everyone 😫😫😫😫 gets on the block).

Now the mechanics would be completely different. Read carefully and remember. First, the size of a single block in a chain will become flexible and will be able to increase up to 2x during periods of increased load on the network. Second, the gas will not be sent to miners but will be burned, going to a zero address. Thirdly, the gas will be determined algorithmically.

Why make the block size flexible? It will help make the price of gas cheaper when demand is high on the network, as more people can fit into one block. Imagine a train, a ticket office, and passengers. If demand is constantly very high, ticket prices will go over the moon because the supply of cars is limited. But if you double the size of the cars, more passengers will fit, and their needs will be covered.

Why haven’t the blocks been increased earlier? Because block size has an inverse effect on decentralization. How? The bigger the blocks, the more powerful the equipment needed by the miners, which not everyone can afford. In other words, more requirements lead to fewer people who will want to meet them.

What benefits?

  • Ethereum becomes a deflationary asset, which increases its value. But maybe not.
  • The price of gas will decrease, the network will be easier to scale, and it won’t have as much trouble surviving high loads. But maybe not.
  • Approaching the transition to Ethereum 2.0 and Proof-of-stake.

Any snags?

Yes, but there aren’t many. I will now highlight the two that seem to me to be the most acute:

Gas wars will remain. With heavy loads on the network and increased demand, miners will still accept the highest-priced transaction (you tip more, you win, as you prioritize).

London will only solve the high gas problems during routine times when there is no increased load on the network. Also, a frequent occurrence on the bullrun is that some event that loads the network has already passed, and gas prices are still cosmic. This problem will also not become a problem after a hardfork.

The algorithm may not detect gas correctly. Yes, gas may be too lower than it should be, for example. How will this be avoided? Developers have a plan B (addition) + plan C (rollback of the proposal) if something goes wrong.

4) Will London change the market?

All judgments below are subjective and do not constitute financial advice.

As good and important as this update would be — the maximum we should expect right now, in my opinion, is a small pump. We are getting deeper and deeper into a bear market. And the bear market doesn’t look at the good news; it doesn’t care at all.

This update could be the accumulative news that will turn the market around but only later and in conjunction with other cool headlines.

What are we left to do then? HODL, love, and believe.

5) Sources…I need sources!

https://notes.ethereum.org/@vbuterin/eip-1559-faq#Why-not-just-use-a-second-priceor-kth-price-auction-to-solve-the-first-price-auction-inefficiencies

https://medium.com/ethereum-cat-herders/london-upgrade-overview-8eccb0041b41

https://incrypted.net/one-step-closer-to-completing-ethereum-2-0/

https://www.gemini.com/cryptopedia/ethereum-blockchain-pos-proof-of-stake

https://notes.ethereum.org/@vbuterin/eip_1559_spikes#Why-I-think-EIP-1559-block-variance-is-nothing-to-worry-about

https://eips.ethereum.org/EIPS/eip-1559 https://eips.ethereum.org/EIPS/eip-3529 https://eips.ethereum.org/EIPS/eip-3541 https://eips.ethereum.org/EIPS/eip-3198

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