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Is EIP-1559 really that magical?

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EIP-1559 may not be as magical in the short term as many people think, but in the long term, its implications are huge.

Is EIP 1559 really that magical?

Last night's porridge, Babbitt

The high profile London hardyThe upgrade (which includes the EIP-1559 proposal) was tested on the Ethereum Ropsten online line yesterday, and the network destroyed more than 80,000 in just 24 hours, according to WatchTheBurn.comETH(Note: only the test coins of the Ropsten test network were destroyed).

日销毁 8 万 ETH，EIP 1559 真的那么神奇吗？

I believe that many people will have great expectations for the London Hard Fork and EIP-1559 after seeing this news, and I want to pour cold water on it. In the short term, EIP-1559 is not as magical as many people think, but in the long term, its significance is very great.

The London Hard Fork contains five EIPs. They are:

According to the Ethereum Foundation's announcement last week, following the Ropsten test network, the Goerli test network will activate the London hard fork at block height 5062605 for an upgrade (expected on June 30), The Rinkeby test network will be activated and upgraded at Block 8897988 (scheduled for July 7).

And after that,developersWe will set the height of the main network upgrade block.

The importance of EIP-1559

The Ethereum blockchain isIntelligent contractAnd decentralizationfinancial(DeFi), one of the most commonly used networks for applications, and the current transaction cost model for Ethereum has proven to be unsustainable due to periods of high network activity that can cause users to pay exorbitant fees, skyrocketing gas fees become a barrier and spawning competition between other chains and the Ethereum blockchain.

Pending Proof of Interest (PoSThe EIP-1559 upgrade is proposed as a fee reform mechanism in conjunction with the network or Ethereum 2.0.

In a recent blog post shared by Tim Beiko:

"The Ropsten miners and Goerli/Rinkeby validators will need to double their gas limits to the previous level, as the block size will double once the London hard fork comes online, and EIP-1559 will leave the block approximately 50% full."

For example, if you were a Ropsten miner with a block size of 8 million gas before the London Hard Fork, you now need to target a cap of 16 million gas to keep the average number of transactions per block the same. If you don't change the GAS limit target, you will start reducing the block size of your network.

According to BitinfoCharts, the average transaction fee for the current Ethereum network is around $3.70, which has dropped significantly from $70 (average) in mid-May, however, as ConsenSys, Ethereum's software solution provider, confirms, The London Hard Fork and EIP-1559 will not result in a significant reduction in gas charges. It explains that the purpose of EIP-1559 is not to reduce gas prices, but due to the predictability of the charges, it may result in lower gas charges, thus ensuring that users pay more for less gas.

And then there's the question that a lot of people are concerned about.

How much ETH is going to burn

The WatchTheBurn website allows you to track the burning of ETH in real time. Burning means transferring the ETH to an address with no private key, and no one can control it.

How much ETH will be burned every day when the Ethereum mainnet comes online? Obviously, looking at the Ropsten test network data is not instructive.

According to an analysis by Justin Ð Rake, Ethereum 2.0 researcher, when the network's daily transaction costs reach 3000 ETH, the new ETH emitted from POS will offset the burning ETH, and the total amount of Ethereum will remain the same, while above this number, ETH will experience deflation. For example, when the average daily network transaction fee reaches 9000 ETH, the total amount of ETH will decrease by 1.3% every year, and when the figure is lower than 3000 ETH, ETH will still continue to inflation.

日销毁 8 万 ETH，EIP 1559 真的那么神奇吗？

According to the historical data of EtherScan, during the bull market cycle of the past year, the number of days in which the daily transaction cost of Ethereum network exceeded 3000 ETH accounted for most of the days. This indicates that during the bull market, the application of EIP-1559 will reduce the total amount of ETH circulation, but it will not be very dramatic.

When the market is in a bear market, ETH will still be in an inflationary state.

日销毁 8 万 ETH，EIP 1559 真的那么神奇吗？

A rough calculation is the probability that the total amount of ETH will continue to rise. Total ETH remains unchanged > The total amount of ETH is reduced (reason: bull is short and bear is long).

conclusion

The adoption of EIP-1559 could be a strong boost to Ethereum during a bull market cycle, but the boost will be limited if the market turns bearish, and there is no need to worry about ETH experiencing deflation.