Ethereum

Ethereums Berlin and London hard fork: The biggest upgrades providing a tailwind for the upcoming ETH 2.0

2021 is a year of progress for ethereum as it goes through some major network upgrades to make a huge leap forward from its proof-of-work (pow) to proof-of-stake (pos) consensus mechanism. Every year, the ethereum network goes through regular updates to bring necessary improvements to its underlying architecture. however, two of the most prominent updates making headlines this year are the berlin and london hard fork, for good reason.

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Reading: Ethereum berlin hard fork

the berlin and london forks are not the regular non-controversial updates we see every year. they bring together a series of network changes to continue ethereum’s natural progression towards ethereum 2.0, also known as the serenity. This article will discuss the details on the berlin and london hark fork updates and why they are a stepping stone to ethereum’s sustainable future.

the ethereum berlin hard fork

The naming convention behind the berlin hard fork is inspired by the first ethereum devcon that took place in berlin, the capital of germany. The Ethereum Foundation officially announced this upgrade on March 8, 2021. The Berlin Hard Fork followed the Muir Glacier and Istanbul upgrades and went live on the Ethereum mainnet at block 12,244,000 on April 15, 2021. /p>

The berlin hard fork implements a series of four ethereum enhancement proposals (eips) that introduce new types of transactions and modify the gas costs associated with complex transactions. the changes made to the berlin hard fork are a springboard for the upcoming london hard fork to be released in july this year.

eips built into the berlin hard fork are:

eip-2565: reduces the cost of a specific set of transaction types that use modular exponentiation, ie modexp (0x00..05).

eip-2929: Increases the cost of those types of transactions that use access state “opcodes” on first initialization. these types of transactions were one of the main reasons behind denial of service attacks on ethereum in the past, and eip-2929 fixes this problem.

eip-2718: introduces a new transaction type called “envelope transactions” that provides support for all new transaction types.

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eip-2930: adds a new transaction type that allows users to create future templates for complex transactions (based on eip-2718 envelope transactions) to reduce gas costs and improve fuel efficiency. processing.

the berlin hard fork update is not backwards compatible, which means node operators and miners need to update their etherum client to the latest version that supports the update. Before going live on the ethereum mainnet, the berlin hard fork was deployed to ropsten (the ethereum testnet) on March 10, exactly two days after the announcement, followed by its deployment to goerli and rinkeby.

next stop, the london hard fork

The London Hard Fork is the most anticipated update among the Ethereum community that aims to solve the decades-old problem of high transaction fees on the Ethereum network. Network congestion and high transaction fees on Ethereum have been a topic of debate for a long time. Over the years, the ethereum network has become very congested and transaction fees have skyrocketed, raising serious concerns about scalability and performance.

source: etherscan.io

To solve the underlying scalability issues, we have promising layer 2 scaling solutions, such as celer network, which provides ultra-fast, low-cost transactions on ethereum. celer is a pervasive state channel network with advanced digest technology that cuts transaction costs by 100x with its project called layer2.finance, which is quite a leap considering the massive volume of transactions on ethereum, thanks to defi.

Layer 2 solutions not only solve the problem of scalability, but go beyond the limitations of the underlying platform to provide different services that would not otherwise be possible at Layer 1. A perfect example of this is celer cbridge, which provides cross-chain asset transfer between the ethereum mainchain and any layer 1 or layer 2 platform in an incredibly fast and secure way.

the london hard fork cannot come close to the scalability and flexibility offered by layer 2 scaling solutions, but it helps to lay the proper foundation for improving the transaction fee mechanism by eliminating the problem of incorrect fee estimation that prevails. in the ‘first price auction’ model currently used by ethereum.

The London Hard Fork implements the EIP-1559 which was first proposed by Vitalik Buterin in 2018. This enhancement proposal brings the following key changes:

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‘Flat Fee’ exclusion: Ethereum has a ‘Flat Fee’ estimated through the ‘First Price Auction’ model. eip-1559 proposes that instead of a single fee, there will be two fees; base fee (to be set per block based on block size) and inclusion fee (an optional fee that goes directly to miners).

deflationary pressure on ethereum: the base rate will burn permanently, putting deflationary pressure on ethereum in the long run.

elastic block size: the block size in ethereum will now be dynamic, depending on the state of network congestion. the maximum gas cap per block will now be 25 million, which is double the current gas cap per block of 12.5 million.

The london hard fork is good news for ethereum users, but certainly bad news for miners. Last month alone, ethereum miners made $2.35 billion in revenue, of which $1.35 billion came from transaction fees. In recent months, we have seen this trend that almost half of the total income of miners comes from transaction fees. with eip-1559 implemented, miners could potentially lose ~50% of their total revenue.

source: the block

The london hard fork is planned to be implemented in July, but the tentative date is not yet finalized due to concerns raised by large mining groups. sparkpool, one of the largest ethereum mining pools with a combined hash rate of over 50%, is on the opposite side, while f2pool, which controls 11% of the network hash rate, is on the opposite side. the support side for the eip-1559 implementation.

summarizing

The berlin and london forks are among the most anticipated updates that are the springboard towards the switch from eth1 to eth2. the berlin hard fork introduces various types of transactions and provides optimization around a specific set of transactions, while the london hard fork creates deflationary pressure on ethereum by omitting the first price auction model, introducing a base fee and burn transaction fees altogether.

about the author

haroon baig is a former microsoft employee, a coding geek turned freelance researcher and writer. He works with companies of all sizes in the blockchain space to establish, expand, and improve their online footprint through his writing. he got involved in the crypto space in 2012 and became fascinated with the underlying technology. ever since, he has been educating people about this space through his content.

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