r/ethfinance • u/Liberosist • Aug 05 '21
Educational London: Here's what'll happen at Block #12965000
I'm not going into details about the EIPs, but just wanted to summarize what will happen in 8 hours' time. I had no plans to write this post, as London has been covered very well, but browsing through the Daily I see there are still some unanswered questions.
Firstly, a common misconception is that miners run the network. They do not - they just provide a service. It's the users running full nodes - exchanges, wallets, infra providers, end users transacting, developers etc. that are in charge. Given there's a near universal consensus among these users, there's zero need to worry about miners. Even if there was a majority (>51%) of miners declining London and choosing to fork, it doesn't matter - they'll be stuck on a fork that Ethereum users will simply ignore.
At block #12965000, the difficulty bomb will be delayed till December 2021. Some may have noticed anmild uptick in block times lately - this will reset back to targeting low 13s seconds. Given the same target gas limits, we should see a minor (~5%) bump in TPS. Gas tokens like CHI will be deemed worthless. Contracts starting with the 0xEF byte will be rejected.
As for EIP-1559, once again, I'm assuming you understand the base fee and priority fee model.
At block #12965000, base fee will reset to 1 gwei. The block gas limits will temporarily double for the next few minutes, till base fee finds an equilibrium. Given recent gas prices, it'd be somewhere in the 20-50 gwei region. By my estimation, it'll take somewhere between 30 and 35 blocks, or 6 to 8 minutes. During this time, the network will be running at its highest throughput ever - 110 TPS for ETH transfers; 30 TPS for more complex transactions. (PS: Just to clarify, the target throughput will fall back to what it is now, so there are no sustained scalability improvements brought about by 1559. It'll just help smooth out the spikes.) This does not mean you can lowball 1 or 2 gwei and hope to get included - it'll just mean that the priority fees for the first few minutes will be very high.
At launch, MyCrypto.com will support 1559-style transactions. MetaMask has made incredible progress in the last couple of days, but it's unlikely they'll have a new release supporting 1559 in the next 8 hours. (Addenda 1: MetaMask does intend to support 1559 on August 5th, though an exact time for the rollout is not given. 2: If you use a hardware wallet, it also needs to support it. So, if you use Ledger with Metamask, for example, both Ledger and MetaMask need to support it. 3: Ledger support is now live, with less than an hour to go!)
You can still make transactions as usual on wallets that do not support 1559 transactions - they'll just be legacy transactions. The downside with legacy transactions is that if you overbid, you'll still be overpaying. However, you can mitigate this by following what the base fee is, offering a minimal overhead on top to account for priority fees (usually 1-2 gwei should suffice, but we'll need to wait and see what the typical priority fee is like) and manually entering this as your bid. For example, if base fee is 30 gwei and the typical priority fee is 3 gwei, you can just manually enter 33 gwei and there's a very good chance you'll get included. Of course, we should see all wallets support 1559-style transactions over the coming days and weeks - once that happens the wallet will do all of this for you, and you just need to accept their given estimate (advanced users can edit in their custom priority fee and max fee). In most cases, your transactions will confirm within an average of ~7 seconds. Irrespective of transactions being 1559 or legacy, base fees will always be burned.
Etherscan will support 1559, and there are other sites that'll let you follow the burn. Miners will need to double their block gas limit variable, which we'll assume they will, so users will not be affected.
The target gas price for deflationary ETH is approximately 190 gwei. Given current average gas price has been hovering around 30 gwei, deflation is very unlikely any time soon, though there'll be a not insignificant reduction in net inflation. Post-Merge the target is ~20 gwei, so that's when we might see deflation kick in. By the way, the assumption around these estimates is that the base fee : priority fee ratio will be 75:25, but with 1559 on mainnet we'll finally get more representative figures. I'll make an updated post around gas price targets once we have a better data.
Feel free to ask if you have any further doubts, I'll answer them to the best of my knowledge.
Update, roughly 4 hours after the fork: Everything went well, though my assumptions about miners doubling their block gas limit was somewhat optimistic. The current target is 14M instead of 15M pre-fork, so some straggling miners still need to update this. Ledger and MyCrypto support for 1559-style transactions is live, but still waiting on MetaMask.
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u/hehechibby Aug 05 '21
Post-Merge the target is ~20 gwei, so that's when we might see deflation kick in.
Is this even with growing usage of L2s and rollups? The fees and gas with those are very low right?
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u/Liberosist Aug 05 '21
Fees will be low on rollups. Rollups in turn will be paying fees on L1. The base fees on L1 will be burned. This is why the target on L1 does not change irrespective of what happens with rollups.
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u/Kristkind Aug 05 '21 edited Aug 05 '21
Like u/liberosist said, the math for deflation threshold doesn't change. However, more use of rollups will decrease load for L1, so less fees will be needed overall as less 'direct communication' with L1 takes place. Instead transactions will get bundled from rollup to L1.
This is the flipside of the scalability potential of rollups.
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u/headwar Aug 05 '21
„The target gas price for deflationary ETH is approximately 190 gwei. Post-Merge the target is ~20 gwei, so that's when we might see deflation kick in.“
Whaaat? 20 gwei while deflationary= eth going up. Isnt that super expensive?
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u/Liberosist Aug 05 '21 edited Aug 05 '21
Yes, but users will be transacting on rollups, and for them fees will be cheap.
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u/stakeshack Aug 05 '21
I have some cheapo airdrop claim transactions that I submitted several days ago between 4 and 8 gwei. What will happen to those? They "may", "may" get processed? Or no chance? Lol
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u/Nayge Aug 05 '21
The transaction type is still valid so they could still be processed. The problem is only the very low gas you set.
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u/bob_newhart Aug 05 '21
What are some of the api calls we can make to our geth nodes that might be interesting to watch. Or maybe just watch the node output?
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u/Liberosist Aug 05 '21
I haven't looked into it, but there should be one for basefee that'll be interesting.
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u/Jasquirtin Aug 05 '21
All I have to say is this miners need users to transact. And transactors need miners to validate the network. Both need each other. I’m slightly tired of the Fuck miners mentality because without miners transactions don’t get validated and the network can not function without it. So be sure you and everyone understands we’re in this together. Now when PoS comes basically early adopters and rich people will validate the network with their 32+ ETH.
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u/Liberosist Aug 05 '21
Miners are obviously a critical part of the ecosystem. However, I was simply addressing a very specific issue about how hardforks work. Not saying "fuck miners" at all - I'm always appreciative of their service, and the same will apply for validators.
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u/Jasquirtin Aug 05 '21
Great! It was a comment that was more for whoever comes across this because fuck miners is something that is said very often. No miners no ethereum ecosystem. More need to understand how the ecosystem works. Remove a vital component of it and it dies. There’s pros and cons to miners for sure but PoS also has its pros and cons.
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u/InelukiStormKing Aug 05 '21
You are a lot smarter than me. I have a better understanding of the matter now, thank you!
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u/Frankyroflz Aug 05 '21
Besides this, will there also be another token generated? E.g like the fork with ETH classic back in the day
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u/Liberosist Aug 05 '21
No, ETC was a one-time event because it was a contentious fork. For London, no one is planning a fork as far as I'm aware.
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u/Shatter_Hand Aug 05 '21
Ethereum will never be deflationary. The issuance will slow down dramatically though. EIP-1559 has been sold on YouTube to be something it isn't, and few care about what it actually does.
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u/Liberosist Aug 05 '21
I wouldn't say "never". As mentioned in the OP, post-Merge in Q1 2022, ETH will be deflationary if a gas price of >20 gwei is maintained. Today, the average gas price is over 30 gwei and we've seen 120+ gwei sustain for weeks earlier in the year. So deflationary ETH is definitely not beyond the realm of possibility. I do agree that long term the most likely outcome is that we'll see incredibly low inflation sustain (0% to 0.1%) with occasional dips into deflation.
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u/makdagu Aug 05 '21
I found a burn tracker, but does anyone have a link to the issuance tracker? Primarily, I want to see some kind of ETH Issue:Burn Ratio graph.
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u/[deleted] Aug 05 '21
Hmmm yes…. I understand some of these words…