What is the Ethereum London Fork?

Ethereum’s London hard fork is an update to the Ethereum blockchain. It’s going to be the latest protocol upgrade since the April 2021 Berlin hard fork. The London hard fork includes some of the most heavily discussed Ethereum Improvement Proposals (EIP) in recent years; 5 EIPs in total.

In this post, we’re going to focus on the most notable EIP - EIP-1559 which introduces a new fee structure to make ETH deflationary. We will be laying out key elements of the proposal, where people can learn more, and what customers can expect from BitGo.

What is an EIP?

An Ethereum Improvement Proposal (EIP) is a technical design document for the Ethereum community that describes new features for the Ethereum blockchain, its processes, or its environment. The EIP should provide a concise technical specification of the feature and a rationale for the feature. Anyone can author and submit an EIP. The EIP author is responsible for building consensus within the community and documenting dissenting opinions. Here you can find more information on the EIP process.

What is EIP-1559?

EIP-1559 fundamentally changes how ETH gas fees work on the network. Below are the most notable changes being introduced:

  • The stated purpose for EIP-1559 is to introduce less volatile, more predictable fees and mining times.

  • The proposal introduces a new “base fee” and “priority fee” to replace the current blind auction system where Users specify a Gas Price and miners select the transactions with the highest offers.

  • The Base Fee will be algorithmically generated depending on the block size (fees increase with more transactions, decrease with fewer transactions).

  • The Base Fee will be burned to cause deflationary pressure and capped at an increase of 12.5% per block to reduce drastic surges. You can follow the discussions here for more in depth analysis.

  • With the new fee model, users also retain the option to prioritize their transactions by adding a Priority Fee to incentivize miners for faster inclusion.

  • It’s important to note, however, that the Priority Fee needs to be included in practice and be greater than 0. This is because miners are incentivized to reduce Uncle Risk (losing their mining reward).

  • The upgrade is fully backwards compatible, so transactions with the existing fee model and the new model will both be supported on the network.

  • Lastly, there is no clear indication that this proposal will change overall gas fees on the network.

When is the London Hard Fork?

The London Hard Fork will happen on Block #12 965 000. It’s expected to take place on August 5, 2021. Here’s a link to the timer.

Where can I learn more?

We recommend reading more about the impacts of EIP-1559 on investors, miners, and end users.

How will BitGo support EIP-1559?

The London Hard Fork is currently expected to occur on August 5, 2021. We’ve completed changes to our Ethereum infrastructure in preparation.

We will be going into a small maintenance window shortly before and after the fork to monitor activity.

Starting August 10, 2021, BitGo will have full support for both EIP-1559 and Legacy fee models. Customers have the flexibility to choose either fee model when sending Ethereum (or ERC20) transactions. We’ll share a more in depth “how-to” post when the time comes.

Later in the month, we will be introducing two additional features to make fee management even simpler:

Fee Guides

You can view the latest network fees in your Ethereum wallet to make more informed and timely decisions.

Automated Fees

You can leave the fee calculations to BitGo for all transactions. Users can specify wallet gas price tiers (e.g. fast, normal, safe) which are used to calculate fees that balance spend and efficiency.

To stay up to date with BitGo’s latest Ethereum developments please subscribe to BitGo Insights Newsletter or contact us.

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BitGo is the digital asset infrastructure company, delivering custody, wallets, staking, trading, financing, and settlement services from regulated cold storage. Since our founding in 2013, we have been focused on accelerating the transition of the financial system to a digital asset economy. With a global presence and multiple regulated entities, BitGo serves thousands of institutions, including many of the industry's top brands, exchanges, and platforms, and millions of retail investors worldwide. For more information, visit www.bitgo.com.

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