The London fork update is officially live on the Ethereum mainnet! MEW web and MEW wallet app are supporting London and EIP 1559 – users don’t need to do anything for the fork. It’s been a long time coming, and we are very excited to take this next step closer to Ethereum 2.0 together with our users.
It’s no secret that at MEW, we believe Ethereum to be the coolest blockchain, and one of the main reasons for that is the very active community of developers (that’s us, and possibly you) and users (that’s definitely you). Ethereum is like your favorite software: always releasing great updates, integrations, plug-ins, and themes.
The London fork, with the included EIP 1559 (more on that below), is exactly this kind of update… with an upgrade! First proposed in April 2019, the changes introduced today have been extensively researched, discussed, and tested by Ethereum’s core developers to make sure that the transition can be accomplished securely. That’s because Ethereum’s developer community is not just prolific and innovative, but acutely aware of dealing with billions of dollars in people’s assets.
What does this update mean for you? Let’s start by breaking down the terms.
What’s an EIP
EIP stands for Ethereum Improvement Proposal. It’s a suggestion to make changes to the standards and features of Ethereum operation. Anybody in the Ethereum community can submit an EIP, but it has to go through a long process of development and testing before it can become part of the main Ethereum network. With millions of users and thousands of projects on the blockchain, any change to the main network needs to go very smoothly without disrupting anyone’s operations.
On Ethereum, EIPs are being submitted, debated, developed, and implemented all the time. In fact, the London update includes a total of five EIPs, but EIP1559 is the one that will make the most difference to users and to the network as a whole, so that’s what we’ll focus on here.
What’s an Ethereum fork
When a significant update to the blockchain network establishes new rules for the creation of blocks, all participants and service providers on the network must upgrade their software and switch over to the new rules. This is called a blockchain fork (think fork in the road, not dinner fork) because there are two paths – the old one and the new one – and there is potential for a split. For example, if a protocol doesn’t update the software, they’ll be left on the old chain, and their transactions will be incompatible with the new blocks. If lots of protocols and network participants don’t update, they’ll continue on the old chain, and the updated ones will move ahead on the new one – that’s when the split happens.
Don’t worry – Ethereum has a long and established history of successful forks without any difficulties or splits. Recently, the forks have been named for cities where Devcon, the biggest annual Ethereum conference in the world, has been held. The previous fork, Berlin, was named in honor of the very first conference that took place in 2014. The current London fork pays homage to the Devcon which happened in 2015.
How the London fork and EIP 1559 help Ethereum
The reason Ethereum can do cool things like DeFi and NFTs is that, unlike Bitcoin, it can run programs called smart contracts. Deploying the contracts and building new blocks requires gas fees that are paid in Ethereum’s native currency, ETH. This is why you need ETH to send tokens from your wallet or interact with any DApp.
Gas fees become problematic when the network gets very busy. The miners, who create new blocks by gathering transactions together into block ‘packages’, are paid with the block’s transaction fees – which works fine most of the time. But when more users are trying to do lots of things on the blockchain, more transactions are trying to get into the same limited-capacity block and more users are willing to pay higher fees to get their transaction mined faster. This leads to unpredictable and rapid fee escalation, which can in turn lead to extremely expensive, failed, or stuck transactions.
EIP 1559 offers a solution to make fees less volatile, transactions more reliable, and the entire experience of interacting with Ethereum smoother.
Before EIP 1559
- block size is fixed and many users are priced out when demand surges
- fee mechanism is a highest-bidder auction, leading to high volatility and unpredictability; setting the right fee without overpaying is difficult both for users and wallet interfaces
- the entire gas fee is earned by the miner, so miners are incentivized to manipulate gas prices for profit
After EIP 1559
- block size is variable, expanding to accommodate changes in demand
- fee mechanism is structured around a base fee which is the minimum required for a transaction to be included in the block; the fee adjusts smoothly with demand, changing only slightly from block to block, making it easier to set the right fee
- only the tip (also known as priority fee) is paid to the miner while the base fee is burned (purposefully taken out of ETH circulation), discouraging miners from manipulating base fees and thereby keeping them more stable
Because the burning of base fees takes some ETH out of circulation with every transaction, it could make ETH deflationary leading to an increase in ETH price, but that is not guaranteed and is not the express purpose of the update.
Another thing to keep in mind: the change in fee structure doesn’t necessarily mean that gas fees will become lower overall – that was not the point of the update either. Only blockchain scaling can reduce fees in the long term. That’s the purpose of Layer 2 solutions and side chains, and the goal of Ethereum 2.0.
How MEW supports the London update
The main thing you need to know is that you don’t need to do anything! The updated Ethereum network will continue to support all your assets. Any transactions, DeFi operations, or DApp interactions will happen in the same way. MEW handles the improved fee mechanism behind the scenes with minimal changes to your interface, so you just enjoy the benefits, as you always have!
You can still choose the fee you wish to pay for the transaction – the difference is that the base fee will now be enough for transactions even during times of high network congestion. Your transactions won’t get stuck in limbo if the network suddenly gets busier, and you won’t end up overpaying for a transaction that may have gone through with a lower fee. There is no need to add the tip unless your transaction is very urgent (or you’re just used to getting the best of everything and don’t mind tipping the miners). The tip does not make the difference of getting the transaction mined or not – the base fee takes care of that.
Ethereum is always innovating, growing, and improving. We are still in the early days, and we are looking forward to sharing this journey with our users!
