Ethereum price is showing an excellent bullish outlook as it rebounded from the range low and retested the resistance level just below the range high. This could be a result of Ethereum 2.0 launching which has been delayed severally due to personal reasons and internal conflict.
London-Hardfork and EIP-1559
Perhaps the most promising development in the Ethereum ecosystem is the transition from Proof of Work (PoW) to Proof of Stake (PoS). Julian Sawyer, CEO of BitStamp Exchange, said ETH stakings have particularly attracted the attention of investors, who stake around 50% of the holdings.
At the time of writing, the ETH 2.0 contract has deposited 6.48 million ETH worth $17 billion.
Regarding BitStamp’s interest in the ETH staking, the CEO said:
“That says a lot. That is not people playing [and saying] ‘Oh, I’ll just put 1%, 10% over there, I’ll put a hundred dollars into this.’ That is people being engaged in the product set and the interest rate.”
The collection of ETH 2.0 contracts shows the interest of users in the upcoming London hard fork. This upgrade is significant as it suggests two major improvements to the existing blockchain network:
The transition from PoW to PoS to improve the scalability of the blockchain while ensuring security and decentralization and the paradigm shift in loading and destruction methods has made ETH a deflationary asset.
According to Ethereum core developer Tim Beiko, the hard fork will go live on August 4th from 13:00 UTC to 17:00 UTC. In other words, the block height of 12,965,000 will be achieved.
The change in the working principle of Ethereum is crucial because ETH 2.0 does not require any energy-intensive mining equipment. However, one of the main reasons for this change is to improve the scalability of the Ethereum blockchain and increase transaction efficiency.
Usually, the Ethereum blockchain will be congested during the peak of the hype, resulting in high gas fees and delayed transactions. DeFi summer 2020 will be the last time that the ETH gas fee has skyrocketed and accidentally stopped the large-scale cycle.
The implementation includes five major proposals, EIP-1559, EIP-3198, EIP-3529, EIP-3541 and EIP-3554.
However, through the implementation of the Ethereum Improvement Proposal (EIP) -1559, the arbitrariness of gas will be eliminated. According to EIP-1559, gas charges are split and a portion of the charges burned, effectively reducing the total charges levied by miners.
Although this controversial fee structure has created a gap between developers, users, and miners, things seem to have cooled off as the proposal gets closer.
Hard fork Delay Concerns
While the basic nature of this upgrade is bullish, there have been many delays in transitioning to ETH 2.0. As a result, investors are concerned about the London hard fork, which was launched in the Ropsten test network on July 21st. However, since its debut in 2019, things have not gone as planned by the core developers.
From postponement to delay, this proposal generated resistance from the mining community, leaving the Ethereum network exposed to 51% attacks.
At a conference in June 2021, Vitalik Buterin stated that the biggest obstacle to the transition from ETH to ETH 2.0 was personal and non-technical problems. This statement by the ETH founder relates to internal conflicts that have been going on for several years.
Despite its introduction in the testnet, the hard fork is still faced with chain splits, which leads to invalid transactions being broken down into the blockchain. Although the bug was fixed immediately, it is not clear how the situation will change after its implementation on the mainnet on August 4th.