Just like companies upgrade their software to fix bugs and introduce new features, the Blockchain network also receives several upgrades to make it more efficient. The difference, however, is that blockchain upgrades are decentralised and can be proposed by anyone in the network.
In the case of Ethereum, anyone in the community can create an Ethereum Improvement Proposal (EIP) detailing any kind of improvement they’d like to see in the network. The EIPs agreed upon by a majority of the community members can be combined together to make up an upgrade.
One of these kinds of upgrades is the Ethereum London Hard Fork that is scheduled to launch at block height 12,965,000, which is approximately 5th of August 2021 at 13:23 (WAT).
What Is a Hard Fork?
A hard fork, in blockchain, is a new software upgrade that creates a separate network that is incompatible with the existing blockchain protocol and runs parallel with it. Unlike soft forks, hard forks introduce a permanent change in a blockchain protocol’s rules and are not backwards compatible.
Due to the fast-evolving nature of blockchain innovation, regular improvement is needed to aid efficiency and protect the network from security vulnerabilities. A notable example of such improvement was the creation of the new Ethereum chain after the original chain suffered a devastating $150 million hack in 2016 due to security vulnerabilities.
The London Hard Fork
The London Hard Fork is a network upgrade that contains five Ethereum Improvement Proposals. These EIPs are expected to improve the Ethereum network and are highlighted below:
EIP-1559 is trying to bring stability and predictability to network fees by introducing a hybrid system of base fees and tips to incentivise miners. Unlike the existing protocol that determines gas fees through an auction-like bid process, the system will automatically calculate a base fee based on network activity.
It prevents miners from artificially bumping up the miner fee by introducing a burn mechanism that burns the fee paid by users. However, users can pay an optional tip to miners as an incentive to get their transactions processed faster.
This proposal will also help regulate the amount of Ether in circulation and prevents its economic abstraction.
EIP-3198 is an extension of EIP-1559, which lets smart contracts know the base fee before executing the transaction. That way, Decentralised Apps (DApps) can improve their services and ensure that fees aren’t overpaid.
EIP-3529 reduces gas refund incentives for developers. Gas refund SSTORE and SELFDESTRUCT were originally introduced to incentivise developers to write applications that effectively use the storage and reduce redundant codes.
With this upgrade, the gas refund will be removed for SELFDESTRUCT and reduced for SSTORE.
EIP-3541 rejects new contracts starting with
0xEF byte. In order to prevent already deployed (and not validated) contracts from being recognised as valid, it will choose a byte sequence that doesn’t exist in any of the already deployed contracts.
However, already existing code starting with
0xEF byte is not affected semantically by this change.
Just like Bitcoin, Ethereum mining difficulty is expected to increase, making it ridiculously difficult to find new ETH. EIP-3554 will push this difficulty bomb to December 2021, giving miners more time to prepare.
Although Tim Beiko, an Ethereum Foundation developer has stressed that ether owners who use crypto exchanges or digital wallets won’t be affected by the London hard fork, the industry is still geared for eventualities. In fact, some crypto exchange providers have issued messages to their users telling them not to send or receive ETH & USDC until the network upgrade has been completed.
On the other hand, those who run their own node will need to download the latest version of their Ethereum client after the upgrade.
Fun Fact: Hard forks are named after cities where conferences for developers have taken place.