Big changes coming to the gas fees on the Ethereum chain with the London Hard Fork in July!

in hive-175254 •  8 months ago 

Some might find this topic to be rather confusing. Hard fork? London Hard Fork? Gas fees? If you have grown up on Steem and this is where you spend most of your time when being active in the crypto world, then these might actually be like reading an unknown language.

But, if you have been around for a while and if you have some Ethereum, or maybe done some trading on Uniswap, or just wanted to send ERC20 tokens, then you have done transactions on the Ethereum chain and you have most likely suffered from very high gas fees. But, that is about to change!

ethereum hard fork.jpg
Source: Pixabay

What is the current payment system like for doing a transaction on the Ethereum network?

Doing transactions on the Ethereum chain is always interesting. Currently, the price for transactions is set by the users. In other words, I decide how much I want to pay for a transaction! That sounds nice, doesn't it?

But, then you have the miners! They are the ones processing the transactions. Imagine that you have a truck. One day a person comes to you and tells you that they will pay you $1000 to transport a package to New York. At the same time, a different guy comes and tells you that he will pay you $2000 for the same ride. Who will you pick? The one paying the most for the ride!

That is the way the miners currently operate on the Ethereum blockchain. You decide how much you want to pay for transactions (these are the gas fees), but if you set a low price, the miners will ignore you as long as there are people willing to pay more than you do!

Especially during bullish times, the gas fees aims for the moon. And the humor of it all is that the price you pay isn't influenced by the value of the transaction. In other words, sending $1 or $100,000,000 will cost you exactly the same amount of money (or gas fee).

How will this change with the London Hard Fork?

The London Hard Fork will take place in July 2021. It is a very vital step in turning Ethereum into a Proof of Stake chain, something that will be finalized with the release of Serenity (Ethereum 2.0), now set to be released sometime in 2022.

The biggest change that will come with the London Hard Fork is the following:
Instead of paying a gas fee, you will now pay a so-called block fee. There is a base fee for each block, and this fee will be burned (something that will have a positive effect on the currency itself).

The block fee will be influenced by the number of transactions within the block. But, this will make it way easier to do transactions on the block!

You can still give the miners a tip!

It seems like this will be a big step in making transactions on the Ethereum blockchain both cheaper and easier. But, there will still be a chance to give miners a small tip in order to get in the front of the row. But, if this will proceed as planned, then the number of transactions included in each block will be so big, that your transactions will be processed quickly no matter what, making the tipping function not that necessary!

bottle-2747759_640.jpg
You can still give miners a tip - Source: pixabay

I really look forward to this upgrade!

I am running a couple of Ethereum nodes myself and I have upgraded them to the newest version of Geth, meaning that they should be ready for the upcoming hard fork! This is important because with a hard fork like this, all miners need to run the newest version in order to support the hard fork!

Are you excited about this upgrade? Do you believe that it will lower the fees to do transactions on the Ethereum network? I look forward to hearing from you!

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I always believe Ethereum blockchain will have go far than this if only they gas fee have been able to be controlled and tame

Lower gas fees will help projects launch wrapped tokens, which means their coins can be listed on decentralized exchanges or swapped using Uniswap or similar service.

Interesting post. You make good contributions. Keep posting quality topics.
Commented by: @hojaraskita

The system described here still looks a little complicated to me until it is implemented. However, the ethereum chain will become more attractive if gas fees are greatly reduced. More projects will be built on it, and small scale investors can hop in more.