Ethereum (ETH) has enjoyed a good run so far in 2021, with its value increasing from about $1,300 at the beginning of the year, to nearly $4,000 in May. However, Ethereum’s price aside, consistent problems on the Ethereum blockchain have brought to light the anger of traders and decentralized application (DApp) developers on the Ethereum ecosystem. Lack of scalability and high gas fees are the main issues.
As one of crypto’s biggest platforms for decentralized applications, Ethereum has been dealing with network congestion that reflects the high gas fees that people have had to pay with every transaction. Since the start of the year, at times, the cost of facilitating transactions on the Ethereum ecosystem has hovered around the $16 to $20 range, going as high as $100 on DApps like Uniswap that have high trading volumes.
From this point of view, the transition to Ethereum 2.0 (Eth2) as a solution designed to address scalability issues, as well as solve the problem of skyrocketing gas fees, is a welcomed reprieve by the Ethereum community.
Eth2, or Serenity, is set to be a technical upgrade that will move the Ethereum blockchain from a proof-of-work (PoW) protocol to a proof-of-stake (PoS) blockchain, thereby increasing its capacity for transactions, reducing gas fees and making the network easy to scale and more eco-friendly when generating new coins and validating transactions.
After years in the making, the move toward Eth2 began with the launch of the Beacon chain as a first step to revolutionize the Ethereum network. The move to a PoS blockchain will be one of the biggest updates in the lifespan of the Ethereum blockchain, and therefore it will be carried out in phases. The Ethereum London hard fork is one of the upgrades that will bring the Ethereum network closer to Serenity.
Berlin hard fork
The Berlin upgrade went live at block 12,244,000 on April 15. Named after the host city of the inaugural Ethereum Devcon convention, Berlin is a forerunner to the bigger London hard fork and incorporates four Ethereum Improvement Proposals (EIPs) that deal with gas prices and enable new transaction types.
Berlin’s EIP-2565 involved the reduction of gas fees on Ethereum. This mechanism uses a function called modular exponentiation (ModExp) to benefit Ethereum users who need to run services on the Ethereum network.
EIP0-2718 protocol makes all transaction types backward-compatible, thereby making it easier to add new transaction logic into Ethereum. Developers who created this protocol used a new function known as the Typed Transaction Envelope.
The Berlin Hard fork also features a proposal titled EIP-2929, which introduces an increase in gas prices in opcode transactions. In computing, opcodes are portions of a machine language that specifies operations. Ethereum’s opcodes have been a major pain point for Denial-of-Service (DoS) attacks in the past. With EIP-2929, a higher gas cost will remove the incentive for DoS attacks.
Lastly, the Berlin hard fork features the EIP-2930 protocol that builds upon EIP-2718, bringing about a new transaction type of mechanism that allows users to form wallet address lists so they can trade at much lower gas fees.
Reactions to Berlin
The EIPs introduced with the Berlin hard fork were meant to reduce gas fee cost at a time when saturation on the network was at its peak, as well as improve Ethereum’s efficacy. However, the update was postponed several times due to concerns about possible vulnerabilities caused by the centralization of the upgrade.
Also, the consensus in the Ethereum community was that Berlin would be less impactful in the short term, but still pave the way for the awaited London hard fork’s EIP-1559 protocol.
The London hard fork: Increasing block elasticity
The Ethereum London hard fork is part of Ethereum’s road map on its way to release Eth2. The long-awaited hard fork will likely launch on Aug. 4 in a delayed release previously rescheduled for the end of July.