Will ETH Enter a Deflationary Era? Understanding the Transformative "London Upgrade" Through Five Key EIPs

This year, the Ethereum community is gearing up for two major upgrades: the London Upgrade and the Shanghai Upgrade.

The London Upgrade introduces EIP-1559, which restructures Ethereum’s gas fee mechanism and implements a burn mechanism for ETH, while EIP-3529 will render Gas Tokens obsolete post-upgrade.

The Shanghai Upgrade, expected later this year, may finalize the merge of ETH1 and ETH2, transitioning Ethereum to Proof-of-Stake (PoS) and altering its token issuance model.

For newcomers, some EIPs in the London Upgrade may seem complex. Below, we break down the potential impacts:

Key Impacts of the London Upgrade

EIP-1559: Makes gas fees more predictable and stable. Nearly half of all transaction fees will be burned, reducing ETH inflation. In a thriving ecosystem post-PoS, burned fees could offset newly minted ETH, potentially pushing ETH into deflation.
EIP-3529: Renders Gas Tokens (e.g., CHI, GST2) obsolete. Holders should sell or use them before the upgrade.
EIP-3554: Delays the "difficulty bomb" to December 1, 2021—likely the final deadline for PoW miners.

Now, let’s dive deeper into the timeline and EIPs.

Upgrade Timeline

The Ethereum mainnet London Upgrade is tentatively scheduled for July 14, pending successful testnet rollouts:

| Testnet | Date | Block Height |
|--------------|---------------|----------------------|
| Ropsten | June 24 | 10,499,401 |
| Goerli | June 30 | 5,062,605 |
| Rinkeby | July 7 | 8,897,988 |
| Kovan | TBD (post-mainnet) | — |

Upgrade Details

The London Upgrade includes five key EIPs:

EIP-1559: Overhauls gas fees, introduces ETH burns.
EIP-3198: Adds BASEFEE opcode.
EIP-3529: Removes gas refunds for SELFDESTRUCT, invalidating Gas Tokens.
EIP-3541: Rejects new contracts starting with 0xEF.
EIP-3554: Delays difficulty bomb to December 1, 2021.

Let’s explore each.

EIP-1559: A Game-Changer

EIP-1559 replaces Ethereum’s first-price auction gas model with a base fee + tip structure:

Base Fee: Automatically adjusts based on network demand. Burned permanently, reducing ETH supply.
Tip (Priority Fee): Paid to miners for faster processing during congestion.

Why It Matters:

Predictable fees, no more gas wars.
ETH burns could lead to deflation post-PoS.
Strengthens ETH’s role as the network’s native currency.

👉 Explore Ethereum’s future with EIP-1559

EIP-3198: BASEFEE Opcode

A companion to EIP-1559, this adds the BASEFEE opcode, letting smart contracts access the current base fee.

EIP-3529: Gas Tokens Obsolete

Gas Tokens (CHI, GST2) exploit storage refunds to offset gas costs. Post-upgrade:

SELFDESTRUCT refunds eliminated.
SSTORE refunds reduced.

Action for Holders: Sell or use Gas Tokens before the upgrade.

EIP-3541: Developer-Focused Change

Rejects new contracts starting with 0xEF, paving the way for future EVM upgrades (EIP-3540).

EIP-3554: Difficulty Bomb Delay

Postpones the difficulty bomb to December 1, 2021, aligning with ETH1/ETH2 merger plans.

EIP-1559 Burn Preview

ETH burns could slash inflation. Community tools like watchtheburn.com track testnet burns (~700 ETH so far).

Projection: Over 3 million ETH would’ve been burned in the past year under EIP-1559.

Even with Layer2 growth, increased adoption may balance fee reductions.

FAQs

Q: When is the London Upgrade?
A: Tentatively July 14, pending testnet success.

Q: Will EIP-1559 reduce ETH supply?
A: Yes, burns could make ETH deflationary post-PoS.

Q: What happens to Gas Tokens?
A: They’ll become useless—sell or use them now.

Q: How does EIP-3554 affect miners?
A: PoW mining likely ends by December 2021.

👉 Stay ahead with Ethereum’s latest upgrades

The London Upgrade marks a pivotal shift for ETH. Are you ready?


### **Keywords**:  
Ethereum, London Upgrade, EIP-1559, ETH burn, Gas Tokens, Proof-of-Stake, difficulty bomb, deflationary ETH.  

### **Anchor Texts**:  
- "Explore Ethereum’s future with EIP-1559"