Ethereum London hard fork: Why it’s a huge deal for ETH price
Over the last 24-hour trade cycle, Ethereum (ETH) reached a relative high of $2,227, albeit briefly.
- Despite its strong performance over the past seven days, ETH is currently exhibiting biweekly losses of nearly 18%.
- The London hard fork seeks to tackle many of Ethereum’s current transaction fees and low network throughput-related problems.
- EIP 1559 seeks to transform Ethereum into a deflationary asset, thus potentially making it more appealing to HODLers.
Ethereum has been on a tear in recent days, with the premier altcoin showcasing an increasing amount of monetary support above the $2,000 range, currently boasting weekly gains over 12%. At press time, ETH is trading for $2,200.
To gain a fairer idea of what lies in store for Ethereum, especially as its much-hyped London hard fork looms large on the horizon, Finder reached out to Ross Middleton, chief financial officer for Diversify, a suite of proprietary and 3rd party cryptocurrency-based financial instruments. He, in no uncertain terms, stated that he will never bet against Ethereum, especially as the currency’s core dev team continues to address many of the pain points that detractors have historically used to slight the project, adding:
“EIP-1559 will turn ETH into a deflationary asset and improve user experience. ‘The Merge’ (the move to what is known as Proof-of-Stake) in the Ethereum roadmap will address environmental concerns and completely remove miner selling pressure (as fees will go to public validators instead of specialist miners). The launch of what is known as Layer 2 applications this summer will result in low fees for users and open up even more use cases for Ethereum.”
That said, he did state that the only real headwinds that remain for Ethereum are on the regulatory front, but even when it comes to that, he is fairly confident that regulators will not wish to stifle innovation. “They see blockchain as a new technology frontier they need to foster,” he closed out the interview by saying.
Interesting times ahead
As the global crypto community prepares for the London hard fork, it is expected that the upgrade will help make the Ethereum network make a smooth transition from a PoW (Proof of Work) to a PoS (Proof of Stake) framework. On a more technical note, the update consists of several Ethereum Improvement Protocols (EIP) — particularly EIP 1559 — that seek to not only make the platform’s native fee structure more reasonable but also increase the system’s throughput (TPS) capacity. These two issues have served as major bottlenecks in ETHs growth since the start of the year, even stifling the growth of the decentralized finance (DeFi) sector to a certain degree.
EIP-1559, in particular, is designed to help put a hard cap on Ethereum’s gas fees as well as reduce its fee volatility levels. It will also look to convert ETH into a ‘deflationary asset,’ mainly by burning a small portion of the gas fee associated with each transaction. This may help make the digital asset more appealing to long-term investors — especially those big on Bitcoin — since the number of ETH in circulation will gradually decrease as time passes by.
Disclosure: The author owns a range of cryptocurrencies at the time of writing