A recent announcement has revealed that a new upgrade to Ethereum, which would signal an end to transaction fees volatility, is in place. The event, which is known as the Ethereum improvement proposal, has already been scheduled before the end of July. The new upgrade would see that fees are burnt, transaction fees are paid in Ethereum, and miner’s fees would be scrapped entirely from the network.
Even though miners are scheduled to be cut out of the equation, analysts choose to look at the good benefits of the upgrade. One of such benefits is the pump in the price of the second digital asset that has been scheduled to happen and the ease at which transactions would take place on the network.
EIP-1559 would see Ethereum burnt instead of being paid to miners
This new upgrade, denoted with its code name, EIP-1559, seeks to change how transaction fees work on the network entirely. As at this moment, miners are the biggest gainers during transactions as they take the bulk of the fees that users pay. The amount that a transaction costs has always depended on how much Ethereum the miners are willing to offer and how much the users are willing to buy on the network.
If there is an issue on the blockchain, miners can seize the avenue to charge about $20 on average for transactions. This new upgrade would see to it that the supply and demand system of calculating transaction fees is removed from the network while replacing it with a standard payment method. Known as BASE FEE, the statement pointed out that the fee would be subject to market activities. The fee would be expected to surge when the market sees a lot of activities and returns to normal when the market is seeing just a little activity.
Miners show displeasure at the upgrade
The difference between the previous payment method and this one is that this new fee would be standard and would be maintained by the burning of the asset. The upgrade also sees that miners would not see the rates charged as transaction fees while the network is in charge of it. With the burning of Ethereum, miners would not get any incentive for transactions. According to the Chief of Staked, Tim Ogilvie, this new method might be a blessing on the part of the price of Ethereum.
He also mentioned that with the lower transaction fee, Ethereum would not only be making space for the rich, it would also be pulling developers into the network. He also pointed out that if Ethereum is burned, then the price would react positively due to its scarcity at that point. Finally, he pointed out that even though miners would be disappointed by the move, they can seek consolation in the fact that Ethereum’s price would surge. As expected, miners have shown displeasure at the move as most of them have pointed out that it would dip their returns from the network.