Customers of cryptocurrency exchanges have been notified of the upcoming upgrade to the Ethereum network, dubbed “London,” with an outline of the steps being undertaken during this upgrade.
What is the Ethereum London Upgrade?
“London” is the 11th backward-incompatible upgrade (or hard fork) for Ethereum. It contains 5 “Ethereum Improvement Proposals (EIP) that all aim to improve the network, as well as ETH, the world’s second largest cryptocurrency.
What is EIP-1559?
This is the most controversial of all the EIPs being included in the London upgrade because it will change/redesign ETH’s fee market structure.
The current process is that: the higher the fee a transactor offers, the more likely their transaction gets included in the block (aka the higher gas fee paid, the higher chance the transaction pushes through). For the EIP-1559 authors, this is inefficient. If Ethereum is to be widely adopted it needs a way to ensure all participants are able to pay these gas fees. These fees are notorious especially this March 2021 when fees could go to about $100 or more depending on the type of transaction. Other competing blockchains took advantage of this situation by highlighting how they offer lesser fees when transacting.
The EIP-1559 authors proposed a way for the block sizes to adjust based on how congested the network is. That, and in addition to a “base fee” that rises or falls depending on current demand. The result is that more transactions will be included at any given time depending on the adjusted block size.
If a user transacts and there is no congestion on the blockchain, the user’s transaction could get to the block with the fixed base fee. If the block is congested, the transaction cost would increase rapidly with the increasing base fee to drive the demand down.
Ether will be burned?
An important change in EIP-1559 is that part of the transaction will be burned (meaning a portion of the ETH will be removed from circulation.) This will reduce the supply of ether, with experts estimating a 1% to 2% reduction of ETH supply every year. This makes the London Upgrade probably the most significant update to Ethereum since its launch.
Exchanges’ Plan for London Upgrade
Coins.ph will implement a brief maintenance period for sending and receiving ETH, USDC, LINK, and KNC beginning Aug. 5, 2021 at 5:30 pm. “We will re-enable these services once it is clear that the upgrade has been completed and the Ethereum network is stable.”
Coins.ph said its team will take care of all the technical requirements for this upgrade so its customers do not need to take any specific action for this.
PDAX said it will temporarily suspend the deposit and withdrawal of ETH and other ERC-20 tokens starting Aug. 5, 2021 at 4:00 pm.
The affected tokens include:
PDAX said the trading of these assets will not be affected “but kindly refrain from transferring any of these tokens until we officially resume their deposit and withdrawal as their delivery cannot be guaranteed during this time.”
PDAX said it will resume the affected services by Aug. 6, 2021 at 12:00 pm and will update its customers accordingly.
Bloom said that while the London upgrade is expected to transition smoothly, it recommends its BloomX.app customers to refrain from depositing and withdrawing ERC20 tokens during the upgrade. “This is to lessen the possibility of any unexpected losses. We will update here again on Friday regarding the results of the fork.”
Coexstar said deposit and withdrawal transactions for ETH, USDT, and PAC will be suspended beginning today at 8:00 am until further notice.
Binance said it has taken steps to reduce trading risks brought about by the upcoming upgrade. It will suspend ETH and all ERC20 token deposits and withdrawals. “We will handle all technical requirements for users holding ETH and ERC20 tokens on Binance.” Spot trading is not affected.
While the majority expect that the hard fork will not result to a split in the Ethereum blockchain (thus there will no creation of an additional token), in the event that it happened, Binance said it will credit users with ETH from the chain with the most work done. “We will then also credit users with the token from the minority chain at a ration of 1:1 based on the snapshot of ETH balances at block height 12,965,000. Further details will be provided at a separate announcement.
OKEx said it will suspend ETH deposits and withdrawals and will credit to users any additional token that will be created due to the London upgrade (although, again, the London upgrade has the majority support so it’s unlikely that a new token will be created.) OKEx also said trading will remain unaffected and its ETH Savings services will continue even during the time of the upgrade.
This article is published on BitPinas: Ethereum London Upgrade | Exchange Notice to Customers
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