What Is the Ethereum London Hard Fork?

Key Takeaways

• The London hard fork was launched in August 2021 and introduced two major changes: a new way of handling gas fees and a delay to Ethereum's mining "time bomb".

• 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, 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 the Merge, commonly referred to as Ethereum's shift to Proof of Stake.

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 satisfied 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 Ethereum Improvement Proposal 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 network congestion.

For example, if the network fee is around $20, sending any value below that in a transaction is not worth it. These high gas fees make the network less attractive, especially for beginners and users conducting smaller transactions.

EIP-1559 proposed a new transaction pricing mechanism that creates a base fee for each block. The blockchain burns the base fee, reducing the overall supply of ether. This effect creates 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 fee 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.

What Is EIP-3238?

EIP-3238, introduced in the London hard fork, delayed Ethereum's difficulty bomb, which was a mechanism designed to make Proof of Work (PoW) mining increasingly difficult over time. The difficulty bomb aimed to encourage the network's shift to Proof of Stake (PoS) by eventually making PoW unviable.

In 2021, the Merge was not yet ready, so developers used EIP-3238 to postpone the bomb and avoid disrupting the network prematurely. 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 Proof of Stake, the difficulty bomb is no longer active and serves only as a legacy feature.

Ethereum Community Reaction

The London upgrade sparked considerable 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 large mining operations would be able to stay profitable, potentially leading to greater network centralization.

However, with Ethereum's full transition to Proof of Stake, mining is no longer part of the network and those concerns have become less relevant. The deflationary impact of EIP-1559 continues to influence the network, 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 up 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 to incentivize validators to include your transaction faster.

However, the base fee can change between when you submit a transaction and when it is added to a block. To avoid unexpected costs, you can set a fee cap as the maximum you wish to pay. If a validator 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 was a significant milestone in Ethereum's evolution, helping pave the way for the network's major transition to Proof of Stake in 2022. The changes introduced by EIP-1559 and EIP-3238 fundamentally altered how transaction fees work and accelerated Ethereum's shift away from energy-intensive mining. These innovations continue to influence how the network operates today, making Ethereum more sustainable, predictable, and user-friendly for millions of participants worldwide.

FAQ

What is the Ethereum London Hard Fork and when did it occur?

The Ethereum London Hard Fork occurred at block 12,965,000 in August 2021. It introduced EIP-1559, which implemented a base fee mechanism and burned transaction fees, fundamentally changing Ethereum's fee structure.

What is EIP-1559 and how did it change Ethereum transaction fees?

EIP-1559 reformed Ethereum's fee system to be more predictable and less volatile. It introduced a Base Fee that gets burned, creating a deflationary mechanism. This improved transaction efficiency and user experience on the network.

How did the London Hard Fork affect Ethereum miners and mining rewards?

The London Hard Fork introduced EIP-1559, which reduced miner revenues by burning transaction fees instead of rewarding them to miners. Miners retained only the 2 ETH block reward, significantly decreasing their profitability from mining.

What is the difference between Ethereum before and after the London upgrade?

The London upgrade introduced EIP-1559, replacing the gas auction system with a base fee mechanism. Transaction fees are now partially burned, reducing ETH supply and making gas prices more predictable and efficient.

How does the London Hard Fork impact ETH token economics and supply?

The London Hard Fork introduces EIP-1559, which burns a portion of ETH transaction fees, reducing overall ETH supply over time and making ETH more deflationary, potentially increasing scarcity and value.

What are the benefits of the London Hard Fork for Ethereum users?

The London Hard Fork introduces EIP-1559, making transaction fees more predictable and reducing gas fee volatility. Users benefit from a more stable and efficient fee market on Ethereum.