The long awaited Ethereum upgrade EIP1559 is coming soon. EIP1559 is one of several upgrades that are part of Ethereum 2.0. ETH holders are excited and have all reasons to be, as this upgrade fixes many of the current Ethereum problems. Here is what it entails.
One of the most important Ethereum upgrades of all time is happening very soon and ETH holders are excited.
Upgrade will fix problem with Ethereum gas fees
EIP1559 will make fees on the Ethereum network more affordable. EIP1559 will take the current gas fee price model which can variate and will implement a new system which will have a set rate of fees. A quote from Gemini.com says:
“EIP-1559 is a proposal to make Ethereum transactions more efficient by using a hybrid system of base fees and tips to more evenly incentivize miners in periods of high and low network congestion.“
Gas fees have been a major issue on the Ethereum network. The fees could go into several hundreds of dollars when the network was overloaded, making it extremely costly to conduct transactions.
EIP 1559 is only the beginning
So, why is this big? One reason that potential new users to crypto are detracted are the outrageous fees which occur on the Ethereum network. When this happens, it effects the entire market. Sure, Ethereum miners might be happy to get paid enormous fees for their work, however, the fact of the matter is that high gas fees mean less buyers in the market.
ETH’s price is currently sitting just below $2500 nearly half of what it’s all-time high reach in May of $4500. With EIP1559 and other Ethereum upgrades coming in the near future like proof of stake and sharding, one can only imagine how bullish Ethereum will be when all of these upgrades are complete.
To put things into perspective, one can think of how far Ethereum has come in the last several years without major upgrades. It’s hard to believe that in March 2020, Ethereum’s price was $40. And nearly a year later it increased one-hundred fold. EIP1559 and other Ethereum 2.0 upgrades will increase the value proposition of Ethereum exponentially. New users to crypto without a lot of capital will be able to trade on the Ethereum network without having to fork over huge percentages of their portfolios for fees. One of the major flaws for trading on Ethereum currently is that it detracts entrepreneurs who don’t have enough funds in crypto to afford the fees.
EIP1559 is just weeks away. There’s no telling where the market will be in July, we could still be trading sideways or we could be in a full blown bear market. However, one thing to realize is that if there is any juice left in the market, EIP1559 could very well be the catalyst to bring it back to life.
Furthermore, this couldn’t come at a more needed time. The crypto market is struggling heavy right now. And an upgrade like EIP1559 could be huge to bring people’s faith back in not just Ethereum, but the whole market in general.
Aaron is passionate about blockchain and has been an investor in cryptocurrencies for the past years. He enjoys engaging with other people in the cryptocurrency community online, particularly on Telegram, and learning from experts.