Bullish for Ethereum: Update for lower fees should come as early as July

The long-awaited fee-saving upgrade for Ethereum could only be a few months away, according to industry insiders.

„Ethereum Improvement Proposal“ (EIP) 1559 is the most discussed upgrade for the network since ETH 2.0 was introduced on December 1, 2020. The EIP addresses the crippling problem of the high transaction fees that have plagued the network in recent months.

The rise in prices and a booming Crypto Trader sector have sparked enormous demand for Ethereum ( new Ethereum record! ). As a result, fees have risen to record levels.

According to BitInfoCharts, the average transaction fee is currently $ 17.

However, that cost has peaked at $ 25 a few times this month

EIP-1559 introduces a mechanism to adjust the current auction process, which determines the transaction prices. This should have the effect of dynamically adjusting the fees so that users pay the lowest bid for the block.

„Predictions Global“ founder and Ethereum developer Ryan Berckmans has indicated that the upgrade could be introduced in July with the „London“ hard fork.

Positive effects on Ethereum

While EIP-1559 will not have a direct effect on ETH prices, it does have an effect on supply. If the update were rescheduled, it would dynamically burn charges that should eventually reduce spending over time as proof-of-stake gets underway.

Berckmans adds that there will also be scaling advantages for Layer 2 providers from the upgrade:

“One benefit of EIP-1559 is that it helps Ethereum scale this year by allowing Arbitrum and Optimism to reliably get their security transactions into the next Ethereum block. Since Arbitrum and Optimism are critical to scaling Ethereum this year, so is EIP-1559. „

Earlier this month, he suggested that the long-term effects of the upgrade could push ETH prices up to $ 20,000 as the fees burned go back to the owners – as opposed to the profits that go to the miners.

Bullish charge burning

Framework Ventures co-founder Vance Spencer believes that the massive burning of ETH fees will create a „wealth effect tsunami“.

There is the additional premise that miners currently have to sell their ETH to cover the cost. Without this selling pressure, the asset has more room to grow in value below proof-of-stake.

Ethereum is currently trading at $ 1,887 (see How to Buy Ethereum ). The asset hit an all-time high of $ 2,050 on February 20, according to TradingView. Since the beginning of 2021, Ethereum prices have increased 155%.

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