By
Temitope Olatunji
April 18th, 2024
The implementation of the EIP-1559 protocol – which changes the base fee structure making Ethereum blockchain deflationary – is creating much excitement among the investors.
On Sunday, July 4, the world’s second-largest cryptocurrency Ethereum (ETH) moved past $2350 levels in a strong move northwards. Ethereum (ETH) has been showing upward momentum over the last week with the investor excitement around the London hard fork.
However, after hitting its intraday high of $2382 on Sunday, Ethereum has seen a minor pullback. At press time, ETH is still trading 3.41% in positive at a price of $2,272 with a market cap of $264 billion.
The Ethereum developers have been already prepping up for the Longdon hardfork upgrade. Two weeks back, they implemented the London hard fork Ropsten testnet while burning more than 88,000 ETH coins. This controversial hardfork involves the implementation of the EIP-1559 gas fee burning protocol.
The Ethereum London Hardfork
The EIP-1559 implementation major changes the structure of Ethereum gas fee by introducing the “base fee” model. It introduces a dynamic fee structure while implementing procedural and periodical fee burnings. Thus, it will make the ETH a deflationary asset for the very first time in history.
The EIP-1559 implementation will considerably reduce the problem of high gas fees for ETH investors. While this is certainly a welcome move for all ETH investors, miners have largely opposed it. Many analysts believe that the London hardfork will bring a positive impact on the ETH price.
The “scarcity” feature will also reduce the number of ETH coins in circulation leading to bullish price swings. Moreover, investors are likely to increase their exposure to Ethereum.
As per on-chain data, the Ethereum active addresses surpassed Bitcoin’s for the first time in history in the last week. The world’s second-largest blockchain network registered over 750,000 active addresses last week. This is a crucial milestone showing the rising acceptance of Ethereum among its peers.
Ethereum Institutional Acceptance
Etheruem (ETH) is finding a rising acceptance among institutional players these days. Financial players have been working on bringing Ethereum derivate products into the market. Just last week, SkyBridge Capital founder Anthony Scaramucci announced that they will be soon be planning its Ethereum fund in the market.
Besides, Scaramucci also announced that his company will also work on bringing Ethereum ETF to the market. This is part of SkyBridge’s efforts to delve into alternative asset classes apart from just Bitcoin.
On the other hand, the Ethereum 2.0 implementation will see a major transition to Proof-of-Staking (PoS) model. There are already more than 5 million ETH coins staked with ETH 2.0 deposit contracts worth over a massive $11 billion. As per JPMorgan analysts, the Ethereum 2.0 implementation could create a $40 billion staking industry by 2025.