Editor | Doorman Operation | Xiao Shitou Feng Qingyang The EIP-1559 included in the London upgrade will change the Gas fee structure of the Ethereum mainnet and introduce a destruction mechanism for the ETH token model. At the same time, EIP-3529 will directly affect the invalidation of Gas Tokens on Ethereum after the upgrade. The Shanghai upgrade may realize the merger of ETH1/ETH2, completely changing the consensus mechanism of the Ethereum mainnet, and at the same time, the token supply and issuance model of ETH will also change. For this London upgrade, some of the EIPs involved may have a high threshold for understanding for new users. Before we go into detail about each EIP, let us first briefly summarize the possible impacts of this upgrade: •EIP-1559 can make future Ethereum Gas fees more predictable and stable. At the same time, nearly half of the network fees in the Ethereum network may be directly destroyed in the future. Although the current market is relatively sluggish, the destruction of ETH has a profound impact on the long-term value support of ETH in the future. Especially after Ethereum transitions to PoS in the future, under the premise of the prosperity of the Ethereum ecosystem, the ETH fees destroyed by the network can even offset the newly issued ETH tokens on the network, pushing ETH into the era of deflation. •EIP-3529 will have an impact on users who hold Gas Tokens (such as CHI, GST2). It is recommended to sell them before the upgrade or use them when the Gas fee is high. Otherwise, after the upgrade, in theory, these Gas Tokens will return to zero. •EIP-3554 is mainly related to miners, and the difficulty bomb is postponed to December 1, 2021, which may be the deadline for Ethereum Pow miners. Below, we will discuss in detail the relevant time points and EIPs in the London upgrade, and share with you a deeper understanding of this London upgrade. In the previous Ethereum developer core conference call, developers tentatively scheduled the Ethereum mainnet London upgrade to July 14. However, the exact time will depend on the London upgrade status of various Ethereum test networks at that time. According to the announcement of the Ethereum Foundation official blog on June 18, the specific upgrade time of the Ethereum mainnet will be determined after all test networks have successfully completed the London upgrade. Currently, the upgrade plans for each test network are as follows: •Ropsten: June 24, block height 10,499,401 •Goerli: June 30, block height 5,062,605 • Rinkeby: July 7, block height 8,897,988 •Kovan: Undecided, maybe after mainnet upgrade According to the specification document of the London upgrade, this upgrade mainly includes five major EIPs, which are: •EIP-1559: Changes the gas fee structure of the Ethereum mainnet and introduces a destruction mechanism for the ETH token model. •EIP-3198: Add BASEFEE opcode. •EIP-3529: Cancels the Gas refund for the SELFDESTRUCT opcode and reduces the Gas refund for the SSTORE opcode, which directly affects the expiration of Gas Token on Ethereum after the upgrade (CHI & GST2). •EIP-3541: Reject new contracts starting with 0xEF bytecode. •EIP-3554: The difficulty bomb is postponed to December 1, 2021, which may be the deadline for Ethereum Pow miners. Below, we take a detailed look at each EIP. EIP-1559 EIP-1559 is the protagonist of this upgrade and one of the most noteworthy changes in the history of Ethereum. In simple terms, EIP-1559 changes the current Ethereum mainnet price-priority Gas fee mechanism, and uses a "basic fee" + "miner tip" Gas fee structure to effectively achieve the stability and predictability of network Gas fees. At the same time, the block size will have an elastic upper limit, and the basic fee will be automatically adjusted according to the utilization rate of the block space. Specifically, the current gas quotation mechanism adopted by the Ethereum network is the first-price auction mechanism, which gives priority to transactions with high gas price quotes. Although this mechanism has a low threshold for understanding and is simple to operate, its biggest problem is that it is difficult to estimate the gas fee, especially during peak trading periods, which often triggers gas auctions and quickly raises the gas price. EIP-1559 achieves stable and predictable gas fees by introducing a combination of a gas fee structure of "basic fee" + "miner tip" and a flexible block size upper limit that changes dynamically according to demand. For users, there is no need to worry about the setting of the base fee, because the protocol for setting the base fee will automatically adjust according to the utilization of the network block space. The long-term goal of EIP-1559 is 10 million Gas per block and a new hard cap of 20 million Gas per block. When the block size is below the target, the base fee will be reduced to stimulate transaction demand. When the block size exceeds the limit, the base fee will increase to suppress transaction demand. Although the base fee is automatically set by the network, when submitting a transaction, users also need to configure two parameter values: "miner tip" and "total fee cap feeCap". •Miner Tip: Only when the block size is higher than the 20 million Gas hard cap, it is necessary for users to set their miner tip. At this time, miners will give priority to transactions with higher miner tip quotes. •Total fee cap feeCap: represents the maximum fee that the user is willing to pay for this transaction (i.e. basic fee + tip). When the network is extremely congested, the basic fee will be very high. At this time, by setting the total fee cap feeCap and the transaction that is also lower than the current basic fee, it will be in the pending state, and you can wait for the basic fee to drop in the future and wait for the miners to package the transaction. At the same time, the most anticipated feature of EIP-1559 may be the destruction of basic fees, which has many far-reaching implications: •Introducing a destruction mechanism for the ETH token model can effectively reduce the inflation rate of ETH tokens. In the future, with the assistance of the mainnet’s transition to PoS, ETH may even enter an era of total deflation. •Technically speaking, current network transaction fees do not necessarily have to be paid in ETH. Users can use any token to pay transaction fees to miners through meta transactions. At the same time, MEV is currently popular, and many MEV transactions do not require any fees. Miners receive packaging rewards through MEV. After applying EIP-1559, the base fee of each transaction will be denominated in ETH and will be destroyed, which can consolidate the utility of ETH as a fee token and maintain its monetary premium attributes. EIP-3198 EIP 3198 is the companion EIP to EIP 1559. This EIP only adds the opcode BASEFEE. This opcode returns the base fee value of the block it is in, making it easier for smart contracts to obtain the base fee value on the chain. EIP-3529 EIP-3529 is another major change in this London upgrade. Its direct impact is that after the upgrade is completed, the Gas Tokens on Ethereum (currently 1inch's CHI and GasToken's GST2) will become invalid. Let’s not explain the changes included in EIP-3529 for now, but first take a look at Gas Tokens. Gas Tokens are essentially the tokenization of Ethereum block capacity rent. Gas Tokens utilize Ethereum's storage refund mechanism. Users mint Gas Tokens by saving data to the GasToken contract storage, and then send the Gas Tokens back to the contract for destruction, releasing the previously saved storage elements. The Gas refund obtained can be used to offset the Gas fee of new transactions. The current Gas refund function is to incentivize developers to clear the state when possible, but in fact after the emergence of Gas Tokens, Gas refunds have led to an increase in the size of the state. Therefore, EIP-3529 will cancel the gas refund of the SELFDESTRUCT opcode and reduce the gas refund of the SSTORE opcode. Currently, most GasToken contract destructions call the SELFDESTRUCT opcode, so the Gas Token mechanism will no longer take effect after the upgrade. Therefore, for Gas Token holders, EIP-3529 has a significant impact on them. In theory, after the London upgrade, the price of Gas Tokens is bound to return to zero; therefore, either sell Gas Tokens before the information is still asymmetric; or use up the Gas Tokens held before the upgrade. However, the current mainnet Gas fee is so cheap that theoretically, it is very inefficient to use Gas Tokens to offset Gas fees in transactions. For example, for CHI, in order to better offset Gas fees, the Gas fee when using CHI should be more than twice that when minting CHI. EIP-3541 For ordinary users, there is no need to care about EIP-3541, because it is more of an EIP related to developers. EIP 3541 is a simple change that lays the foundation for the EVM improvement proposal EIP 3540. Once EIP 3541 is implemented, new contracts that start with the 0xEF bytecode will not be able to be deployed. Existing contracts will not be affected. After the "London" upgrade is launched, contract deployments whose shortest bytecode sequence starts with 0xEF but does not match the starting sequence of existing contracts will be rolled back to determine contracts that are compatible with EIP-3540 semantics. Please note: EIP 3540 requires a separate network upgrade to be deployed. It is also important to note that if EIP 3540 is not deployed, EIP 3541 can also be used to reserve the starting byte for use in other scenarios. EIP-3554 EIP-3554 aims to postpone the difficulty bomb until December 1, 2021, when it will be included in the Shanghai upgrade. The difficulty bomb has been postponed three times before, during Metropolis (EIP-649), Constantinople (EIP-1234), and Muir Glacier (EIP-2384). The purpose of incorporating the difficulty bomb into the Shanghai upgrade is to allow Ethereum to smoothly transition from the PoW to the PoS mechanism. After the introduction of the difficulty bomb, mining will become increasingly difficult, and this difficulty value will begin to rise exponentially at a certain block height as the block height increases, greatly increasing the difficulty of mining in a short period of time, that is, the difficulty bomb explodes and enters the Ice Age, forcing all miners to abandon the old chain in order to complete the transformation of Ethereum PoS. It is currently expected that the Ethereum mainnet will merge the current PoW network and beacon chain in the Shanghai upgrade in December and adopt PoS, which also means that Ethereum PoW miners can still mine until at least December, depending on the execution time of the Shanghai upgrade. 「EIP-1559 Destruction Preview」 The destruction of transaction fees of EIP-1559 in this London upgrade is the most anticipated part of the Ethereum community. The destruction can effectively reduce the inflation rate of ETH tokens. In the future, with the assistance of the main network transition to PoS, ETH may even enter an era of total deflation. At present, some developers in the Ethereum community have created an ETH fee destruction visualization site http://watchtheburn.com/ based on the Ethereum developer network Calaveras, preparing for the visualization of ETH fee destruction data on the main network in the future. The total fee destruction on the Calaveras developer network has currently reached nearly 700 ETH. At the same time, some community members have simulated the cumulative amount of ETH that will be destroyed by implementing EIP-1559 in the past year, which is close to three million ETH. Even though the recent trading activities on Ethereum are relatively sluggish and the network fees have dropped significantly, we believe that the prosperity of the Ethereum ecosystem in the future is inevitable, and the prosperity of the future ecosystem will definitely have a direct impact on the value and price of ETH through the destruction of ETH fees. Although some community users may wonder whether the prevalence of Layer2 in the future will lead to a decrease in the total network fees, this cannot be concluded at present, because this relationship may present a dynamic balance in the future. Although Layer2 can effectively reduce transaction fees, this cheap transaction fee will attract more transaction demand and even push the network fee to another level. The long-awaited Ethereum London upgrade is coming soon. It will debut on the Ropsten testnet on June 24 and is expected to be upgraded on the mainnet in late July or early August. EIP-1559 will push ETH into a new era. Are you ready? |
