Ethereum’s fee market improvement proposal 1559 is set to kick in at block 12,965,000 which is estimated to occur around mid-day European time on August the 4th, less than a month from now.
That’s according to Tim Beiko, the ethereum 1.0 coordinator, who publicly stated: “August 4th should provide enough time to advertise the client releases that are mainnet compatible, and allow infrastructure providers & node operators to upgrade.”
The block number is still somewhat tentative however with full confirmation expected later today as Beiko said:
“A few client teams have “ok’d” it already, but we want to be sure no one has a serious objection.”
A serious objection would probably only arise if some bug is found in the testnets, which so far has not been the case.
Two of them are running, Goerli and Ropsten. The latter was first to launch on the 24th of June and since, it has seen 89,000 eth burned worth $212 million. Rinkeby is to upgrade later today.
In total this would give the testnet about six weeks, after which if there have been no problems during this public testing, the upgrade goes live with it having its own visuals of eth burned by the block.
As part of this mechanism which targets the burned base fee to be sufficient for 50% of extra capacity, the ethereum network will double the gas limit which will significantly increase transaction capacity.
It will also to some extent level the playing field between miners – and later on stakers – and users as they won’t be able to spam for free by sending countless of transactions to themselves to increase total fees. Instead they’ll have to pay the base fee like everyone else and watch it burn.
That means more generally ethereum holders should benefit from gas guzzling spammy tokens with eth itself kind of having ‘dividends’ after the upgrade.
Unlike in company shares where holders are paid based on profits, here they would be ‘paid’ by network usage taking eth out of circulation. So reducing total supply either from what it would have been or in absolute terms, depending on network demand.
This in turn should put eth at the center of the entire ecosystem, including defi, because currently defi demand indirectly benefits holders, but once the upgrade goes through it would be a direct benefit through burning.
Moreover, the burning can only increase. The 89,000 eth number above can only go up with there being no mechanism to unburn. On the other side new eth gets ‘printed’ for stakers once full Proof of Stake goes out, so there won’t be a situation where there’s zero eth in circulation.
Overall, eth becomes a different asset from an investment perspective once the upgrade goes live next month, with it turning into the only major crypto that gives dividends of sorts for just holding. So requiring no new risk or action, like by staking, to get the ‘dividends.’
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