Ethereum core developer Tim Beiko announced on April 23 that the highly anticipated London hard-fork and the included EIP1559 will likely go live by July 14. The EIP1559 upgrade will burn ETH tokens, relative to the fees generated on the network and will likely cause the ETH token to become deflationary i.e reduce supply by burning tokens.
The London hard-fork contains the token burning EIP1559, EIP3198 BASE FEE initiator, EIP3238 to delay Ice Age push-back, and another EIP for gas fee refunds, which wasn’t specified yet. Ethereum has been generating the highest amount of fees for any crypto protocol. These fees will burn/reduce the number of ETHs in circulation. Later, Ethereum 2.0 will follow and bring massive improvements.
The graph shows the number of fees generated on the network and the amount of tokens EIP1559 would burn after its introduction. Relative to current fees, EIP1559 will burn around 6000-6500 ETH/day. This is likely to immensely boost ETH’s price, as more and more tokens disappear from the circulating supply. The largest smart contracts platform in the world already has a massive supply locked in several protocols. Those protocols are Eth2 deposit contracts, other smart contracts, and DeFi protocols. ETH might be able to cross $5000 this summer. Some other analysts hint at even $10,000 per ETH figure.
About Ethereum 2.0
Ethereum 2.0 is the next big upgrade for the Ethereum network. It will bring Proof of Stake (POS), eWASM, and sharding. It will reduce the resources, required to run the Ethereum network, as well as bring scalability and performance improvements.
The Eth2 upgrade consists of three phases. The first Phase 0 Beacon Chain launched on Dec 01 ’20 and introduced the staking feature. This is followed by Phase 1 in Q1 2021, which will introduce sharding and allow data to be stored on shards, however, transactions can’t still be processed.
Phase 2 will make Ethereum 2.0 truly complete and the network operational, after its introduction at some point in 2022. It will bring the Ethereum WebAssembly (eWASM) replacing the now operational Ethereum Virtual Machine (EVM). Only after Phase 2 has been rolled out, proper execution of smart contracts and transactions can start on the Eth2 chain. The Eth1 and Eth2 chain will gradually merge with each other.