After several months of heated discussions and debates, the London hard fork has been successfully deployed on the Ethereum network, at block 12,965,000 as initially planned. This hard fork marks a major turning point in the history of the smart contract network.
Hard fork London successfully deployed
That’s it, the London hard fork was deployed on August 5, at block 12 965 000.
Currently, about 94% of the network nodes have migrated to the new version of the client. The remaining 6% will need to update their clients as soon as possible.
As a reminder, the London hard fork introduced 5 EIPs (Ethereum Improvement Proposal). Among these EIPs, two were particularly expected by the community:
- The EIP 3529: which makes obsolete the gas tokens ;
- The EIP 1559: which modifies the mechanism of fees on the network.
ETH burned by the bucketload
As you probably know, EIP 1559 evolves the fee system on Ethereum. So, instead of distributing the entire fee to the network miners, the fee will now have a completely different future.
Indeed, although a part of the fee, called inclusion fee, still goes to the miners, another part called base fee is burned, i.e. destroyed by the network. Therefore, this destruction will lead to a decrease in the total supply of ETH and may lead to a proportional increase in the price of ETH.
The objective of such a mechanism is to make Ethereum and its ETH token deflationary. Indeed, the more the network is used, the more there will be a massive destruction of ETH via the base fee.
We did not have to wait long to see the consequences of the implementation of this destruction mechanism. Thus, only two hours after the deployment of the EIP 1559 on the mainnet, Uniswap had already destroyed the equivalent of 80 ETH, as underlined by Hayden Adams the founder of Uniswap.
3 ETH destroyed per minute
Several sites track the destruction of ETH. According to the data compiled by the Etherchain website, on average 3 ETH are destroyed every minute by the network. This represents a destruction rate of more than 4,320 ETH per day, or a value of about $11.9 million.
Note, however, that these values are highly dependent on the cost of gas, network usage and the rate of creation of new ETH. Thus, it is very likely that they will vary in the days or weeks to come.
On its side, the ultrasound.money website proposes a ranking of the decentralized applications at the origin of this ETH destruction.
Thus, the first destroyer turns out to be the COVIDPunks project with 527 ETH destroyed, followed by the NFT marketplace Opensea with 520 ETH destroyed and the giant of the decentralized exchange Uniswap with 505 ETH destroyed, all versions combined (V2 and V3).
Miners left out in the cold?
Based on several preliminary estimates for the rollout of EIP 1559, it would appear that miners’ income will be impacted by the change in the fee mechanism.
Unfortunately, the various data currently available does not yet allow us to measure the impact.
In any case, miners have never looked favourably on this PIE. A reduction in their revenue is a major blow, especially as the transition to Proof of Stake approaches and their business becomes obsolete.
Let’s hope, however, that the escalation of tensions does not lead to the creation of an Ethereum fork at the time of the transition to Proof of Stake. Indeed, some miners could choose to continue mining the chain in Proof of Work and thus cause a fork of the chain.