The long-awaited London Upgrade has finally arrived. On August 5, 2021, at 20:33 UTC, Ethereum's block height reached 12,965,000, marking the successful completion of the London hard fork. This represents one of Ethereum's most significant network updates in recent years and a critical step toward its transition to Ethereum 2.0.
Five key Ethereum Improvement Proposals (EIPs) were deployed:
- EIP-1559 (Fee market reform)
- EIP-3198 (BASEFEE opcode)
- EIP-3554 (Difficulty time bomb delay)
- EIP-3541 (EVM object format)
- EIP-3529 (Gas refund removal)
According to Ethernodes, 6.9% of nodes remain unupgraded.
EIP-1559: A Game-Changer for Ethereum’s Economy
EIP-1559, the most contentious proposal, fundamentally alters Ethereum’s gas fee mechanism by:
- Splitting fees into a base fee (burned) and priority tips (paid to miners).
- Introducing dynamic fee adjustments to reduce network congestion.
Despite initial miner opposition—including failed collective protests—the upgrade proceeded as planned. Early data from OKLink reveals 4,225 ETH burned (worth ~$11.7M) in the first 20 hours post-upgrade.
👉 How EIP-1559 impacts Ethereum’s supply dynamics
Ryan Watkins of Messari noted that Ethereum’s burn rate could outpace new issuance, potentially making ETH deflationary—a stark contrast to Bitcoin’s inflationary model.
Is Ethereum Entering a Deflationary Phase?
Before EIP-1559, Ethereum’s auction-style fee model led to volatile gas prices during peak demand (e.g., DeFi Summer 2020). Key stats:
- Miners’ income: 43% from fees at May 2021’s peak ($10.3B monthly).
- Post-upgrade: 30% of daily ETH issuance (~5,070 ETH) is now burned.
With Ethereum’s shift to Proof-of-Stake (PoS) in 2022, energy consumption will drop 99%+, further boosting ETH’s appeal.
Ethereum’s Ecosystem Thrives Post-Upgrade
DeFi Recovery:
- Total Value Locked (TVL) rebounded to $730B+ (82% of May highs).
- DeFi market cap surged 65% to $1T+.
NFT Boom:
- Market cap exceeds $205B, driven by NBA, LV, and Axie Infinity.
- Sales volume spiked in July, eclipsing May’s records.
- Gas Fees: Stabilized near 2020 levels (~50 Gwei).
👉 Why NFTs are fueling Ethereum’s cultural revolution
FAQs
Q: Will EIP-1559 reduce gas fees long-term?
A: Yes, by smoothing fee volatility and improving predictability, though demand spikes may still cause temporary surges.
Q: How does ETH burning affect miners?
A: Miners lose base fee revenue but retain tips. Long-term, PoS will replace mining entirely.
Q: What’s next after London?
A: The Shanghai Upgrade (October 2021) will pave the way for Ethereum 2.0’s full launch in 2022.
Conclusion
The London Upgrade marks a pivotal moment for Ethereum, aligning its economy with deflationary principles while bolstering scalability. As DeFi, NFTs, and PoS converge, ETH’s value proposition grows stronger—making this a watershed moment for the network’s future.
Data sources: OKLink, Messari, CoinGecko.
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