The highly anticipated London upgrade for the Ethereum network will launch on Aug. 4 according to the lead developer. It is designed to take the network into a deflationary state, but will not necessarily reduce gas fees through the EIP-1559 update. It is believed that this burn will decrease miner revenue.
What it does do is adjust the auction mechanism for the fee calculation structure and burns a portion of the transaction fees. Over time this will make the asset deflationary, a process that will accelerate once mining ceases and proof-of-stake becomes the primary consensus mechanism sometime next year.
With EIP-1559 comes a new deflation mechanism that will burn the base fee. Developers expect this process to increase scarcity and improve the general usability of the Ethereum network.
In addition, ETH is continually ‘reduced’ as more ETH is ‘staked’ on the network (some estimates state up to 1.4% supply reduction). This adds to market dynamics (lesser supply and constant/increasing demand) and may result in higher ETH prices for investors and holders.
ETH, in the past 24 hours alone, pumped from a daily low of $2,250 to its current level of almost $2,400, which is its highest price line since June 17th.
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