Ether Price Surges Ahead Of London Hard Fork

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The price of the second largest cryptocurrency has picked up steam again with a +14.8% gain over the last seven days. 

An Interim Solution until Sharding will be available

According to a recent finding published by the crypto research firm Santiment, Ethereum has now surpassed Bitcoin in daily active addresses. However, with this important milestone passed, scalability discussions gain center stage again.

As an interim solution before the activation of sharding on the Ethereum 2.0 Proof of Stake blockchain, EIP-1559 will alter the pricing mechanism for including transactions in a block. Instead of auctioning the available block gas limits to the highest bidders, users will pay a flat gas fee which gets burned, but they can include a tip to their fees, which is paid out to miners. 

Additionally, the improvement proposal will introduce a flexible gas limit, which can be increased in times of high network congestion. The London hard fork will further enable smart contract owners to subsidize gas fees on behalf of their users. 

The gas fee which gets burned is likely going to offset Ethereum’s daily inflation rate of around 1,000 ETH. The Ethereum Foundation estimates that 6,000 ETH will be burned daily, turning Ether into a deflationary cryptocurrency. 

Difficulty Bomb delayed again

Another contentious topic is the difficulty bomb, which gradually decreases the mining rewards in order to prepare for the transition to Proof of Stake. The difficulty bomb was introduced in 2016, but already had to be delayed twice. The London hard fork will also invoke EIP-3554, which delays the difficulty bomb once more until December 2021. 

The hard fork has now been activated on Ethereum’s Ropsten testnet and will launch on the testnets Goerli, Rinkeby and Kovan at an interval of one week each. The mainnet launch is anticipated to happen in July.

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