Following the successful implementation of its most recent hard fork upgrade, dubbed “London”, the price of Ethereum (ETH) has skyrocketed. The second-most valuable cryptocurrency after Bitcoin (BTC), Ethereum is now solidly on route to migrating to a fully Proof-of-Stake (PoS) blockchain.
The London hard fork went live on 4 August 2021, featuring five Ethereum Improvement Proposal (EIPs) including the highly anticipated EIP-1559. A key element that the fork aims to fix is transaction fees, which have been so high on recent occasions that the network has become largely unusable. With EIP-1559, there is now a base fee added to every transaction, giving users a better idea of what they will pay and, hopefully, lowering overall fees in the long term.
Furthermore, EIP-1559 also changes the way in which fees are handled, with the ETH now being burnt (removed from circulation) rather than paid to miners. This is a key feature of Proof-of-Stake (PoS) networks, designed to limit inflation, maintain scarcity and subsequently ensure value. According to data from ETH tracker Ultrasound.Money, nearly 14,000 ETH worth over $40 million has been burned since the fork.
Critics of Ethereum were skeptical in the run-up to the new hard fork, with many suggesting the price of the cryptocurrency would fall. However, so far the opposite seems apparent, as the price of ETH has climbed by 20% since the new implementation, reaching a bi-monthly high above $3,000 early Saturday morning.
The positive sentiment has been felt across the cryptocurrency market, with fellow coins Cardano (ADA) up 10% and Bitcoin (BTC) climbing 5.5% in the past week. The overall market has enjoyed an increase of $300 billion since 4 August and looks set to soon break above $2 trillion should this rally continue.
However, with the new U.S Infrastructure Bill featuring crypto tax regulations that favor Proof-of-Work (PoW) networks over PoS, it will be interesting to see how Ethereum progresses from here. The bill outlines stricter tax reporting requirements for cryptocurrency companies, with an aim to raise $28 billion for infrastructure improvements.