In case you missed it, Ethereum’s blockchain developers have announced that they will be moving forward an update to the network, which will happen around April 14, 2021. The upgrade will look to limit network fee variability and reduce the overall supply of total active ETH Tokens.
Since the announcement last week, Ethereum (ETH) is already up +5.55%, a price increase from $2,270 to $2,396 AUD. It’s a highly anticipated upgrade that has crypto traders speculating what impact this will have on ETH’s price.
The update known as The London Hard Fork, will see ETH Tokens permanently burned once they have been used to pay a ‘gas fee’ when settling a transaction, as well as moving to a fixed base rate per transaction.
Overall, this means that the supply of ETH tokens will fall, even as demand continues to rise.
At the present moment, gas fee prices are erratic and determined by an inefficient auction process driven by demand, not price.
Looking to remove delays on transactions for users, the EIP 1559 update, as part of the London Hard Fork, will seek to resolve current instability and volatility on the network by calculating a base line cost for all transactions, which will be used to calculate the associated fees.
So what does this mean?
Once this update is rolled out, fee inflation will be controlled and Ethereum will experience increased scarcity, as more tokens are destroyed through transaction fees.
Currently, ETH’s All Time High (ATH) is recorded at $2,631 AUD. Will increased scarcity of Ethereum result in a price skyrocket?
That is the question everyone would love an answer to.