Last updated on May 17th, 2023 at 11:55 am
Ethereum improvement plan (EIP-1559) is like any other development step where a commodity goes under troubleshooting to improve and enhance its performance and resolve any issues.
Table of Contents
The only thing different about the Ethereum improvement plan is that it is part of a popular cryptocurrency.
These components include Application Programming Interfaces (API) and Ethereum standard protocols.
The improvement plan focuses on the fee structure for the transactions of Ethereum. These changes will most likely remove the setbacks faced by many users.
Confusions about EIP
We’ll clarify a few misconceptions that are floating in people’s thoughts in this part.
There is a misconception that EIP makes Ethereum transactions less expensive, but this is completely false.
The overall cost of the gas is determined by the execution of a transaction and the amount of available block space.
By enabling the block size, EIP boosts demand while lowering the price of gas. The chain’s extensibility cannot be improved in this way; hence there is no long-term possibility.
Another confusion among the people is that a few ETHs are burned with each transaction, which automatically balances the current issuance rate. However, the reality is quite the opposite.
Benefits of EIP
Some of the advantages that users can experience of the EIp are:
- An on-point transaction charges estimation.
- Symbiotic connection between the users in the Ethereum network.
- A proper secure method of transaction.
‘Gas Prices
The improvement plans revolve around changes proposed for gas prices which are the transaction fees for trading Ethereum. The changes include automating the bidding system to remove biased responses from the miners.
Previously, buyers used to bid high enough to attract the miner to get preference for trading Ethereum.
With the change in the bidding system, the automated system will fluctuate the prices according to the traffic and demand for Ethereum.
‘Burned’ Fee
The Ethereum improvement plan also brings changes to the transaction fees. The transaction fee will depreciate to prevent regulation.
It will promote increased demand for Ethereum, higher prices, and increased value for cryptocurrency and related commodities.
Effects of Ethereum Improvement Plan
The changes proposed for the development of Ethereum will affect the investors eventually. Although it might not be noticeable in the short term, it will be effective in the long term.
The Ethereum improvement plan intends to improve the Ethereum ecosystem.
These changes might seem minor, but they will bring a drastic change to the Ethereum marketplace as they will reflect on the demand and supply of the Ethereum currency.
It will also reflect on all the commodities associated with Ethereum in the Blockchain platform and crypto marketplace.
These changes will translate to a more precise estimation and valuation of the transaction fee. Furthermore, the bidding system’s automation will reflect a better relationship between the Ethereum network and users. It will increase the value of Ethereum.
There are specific measures associated with the improvement plan to ensure and upgrade the security protocols of Ethereum.
The proof of Stake (PoS) model evaluates the transactions by miners depending on the worth of their crypto assets.
It will promote Ethereum towards deflationary assets by giving the user opportunity to own and hold Ethereum.
Similarly, Proof of Work (PoW) assigns tasks to the users to get validation for their transactions. The users prefer the PoS model as it requires less effort.
Although, after the implantation of this plan, miners will suffer in the form of not receiving any incentive for Ethereum trading as the transaction fee burning will stop the circulation of the transaction fee.
Conclusion
The concept and objectives behind the Ethereum Improvement Plan are to eliminate all the flaws and issues in the Ethereum network. It takes a while to diagnose and analyze these flaws and develop solutions for them.
Furthermore, implementing these changes is quite challenging as the users don’t want to land in a strange environment instantly.
These changes will improve the Ethereum network and marketplace, making it more secure and enhancing its performance in crypto marketplaces like the Bitcoin Trading Platform.
There are several currencies and Blockchain assets associated with Ethereum. These commodities will also have a positive impact on their response.
Note: Trading crypto assets comes with some risks, kindly talk to your financial advisor or check our disclosure on digital assets for more.
