Key Takeaways
The London hard fork was launched in August 2021 and introduced two major changes: a new way of handling gas fees (EIP-1559) and a delay to Ethereum’s mining “time bomb” (EIP-3238).
The update made sending transactions easier and less confusing, especially during busy times.
The upgrade also laid important groundwork for the Merge in 2022, when Ethereum officially moved to Proof of Stake.
Introduction
The Ethereum London hard fork, launched in August 2021, followed the Berlin upgrade earlier that year. It introduced key changes to Ethereum’s transaction fee system and block difficulty schedule, which prepared the network for its eventual shift from Proof of Work (PoW) to Proof of Stake (PoS).
The update was controversial at the time because it marked a turning point in how users interact with Ethereum and how miners earned revenue. Though the effects were initially uncertain, the London update played a foundational role in Ethereum’s transition to PoS, which was finalized with the Merge in September 2022.
What Changed With the Ethereum London Update?
The London upgrade was a hard fork that introduced several Ethereum Improvement Proposals (EIPs), with two notable proposals:
EIP-1559: Redesigned Ethereum’s transaction fee mechanism by introducing a base fee model and a burn mechanism.
EIP-3238: Postponed the difficulty bomb to allow more time for Ethereum’s transition to Proof of Stake.
These proposals were part of Ethereum’s broader transition strategy as the network moved toward Ethereum 2.0 (now commonly referred to as the Ethereum Merge or the shift to PoS).
What Is an EIP?
Ethereum Improvement Proposals (EIPs) are technical specifications that outline new features for the Ethereum blockchain. Developers create their proposals alongside suggestions from the Ethereum community. Anyone can make an EIP and submit it for discussion before the community accepts the proposal.
Each EIP follows guidelines laid out in EIP-1:
“The EIP should provide a concise technical specification of the feature and a rationale for the feature. The EIP author is responsible for building consensus within the community and documenting dissenting opinions.”
An EIP author needs to follow a set process before approving the EIP, involving peer review and drafts. Once the community is happy with the proposal, they can then add it to a release.
What Is EIP-1559?
EIP-1559 changed the way users pay gas fees on the Ethereum network. This EIP was created by Ethereum’s co-founder, Vitalik Buterin, and a team of other developers.
Before EIP-1559, users had to manually bid for block space, often overpaying or dealing with stuck transactions. This system became especially problematic during periods of high congestion.
For example, if the network fee is around $20 (USD), sending any value below that in a transaction is not worth it. These high fees make the network less attractive, especially for beginners.
EIP-1559 proposed a new transaction pricing mechanism that creates a base fee for each block. The blockchain burns the fee, reducing the overall supply of ether (ETH). This effect will create deflationary pressure on the cryptocurrency.
The base fee changes for each block depending on network demand. If a block becomes more than 50% full with transactions, the base fee increases and vice versa. This mechanism attempts to keep a half-full equilibrium level for the majority of blocks.
You can still include an optional priority tip to have your transaction processed faster. However, thanks to the base fee mechanism, gas estimation has become far more predictable and user-friendly across most wallets and decentralized applications (DApps).
What Is EIP-3238?
EIP-3238, introduced in the London hard fork, delayed Ethereum’s difficulty time bomb which was a mechanism designed to make PoW mining increasingly difficult over time. The time bomb aimed to encourage the network’s shift to PoS by eventually making PoW unviable.
In 2021, the Merge wasn’t ready yet, so developers used EIP-3238 to postpone the bomb and avoid disrupting the network too early. This gave Ethereum more time to finalize its PoS upgrade, which successfully launched with the Merge in September 2022.
Now that Ethereum runs fully on PoS, the difficulty bomb is no longer active and serves only as a legacy feature.
Ethereum Community Reaction
The London upgrade sparked much debate at the time. Miners were concerned about losing revenue due to base fee burning, while users generally welcomed lower fee volatility. There were also concerns that only big mining operations would be able to stay profitable, leading to more centralization.
However, with Ethereum’s full transition to PoS, mining is no longer part of the picture and those worries have faded into the past. The deflationary impact of EIP-1559 continues today, with millions of ETH permanently removed from circulation through fee burning.
What Did the London Update Mean for Users?
Like Bitcoin, the old mechanism worked similarly to a bid. The more you paid for transaction fees (or gas costs), the more likely your transaction was picked quickly and validated by miners. After the London update, you no longer need to select the gas price you pay when making Ethereum transactions.
Instead, you now pay a base fee, which is burned (permanently removed from circulation), and can optionally add a priority fee (tip) to incentivize validators to include your transaction faster.
However, the base fee can change between when you submit a transaction and when it’s added to a block. To avoid this, you can set a fee cap as the maximum you wish to pay. If a miner includes your transaction in a block where the base fee is smaller than your fee cap, the network will refund the difference.
Closing Thoughts
The London hard fork helped pave the way for Ethereum’s major transition to Proof of Stake in 2022 and continues to influence how the network operates today. It was a significant milestone in Ethereum’s journey toward a more sustainable and user-friendly platform.
Further Reading
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