Key Takeaways
The Ethereum London hard fork launched in August 2021, introducing important changes to how Ethereum handles transaction fees and block difficulty.
EIP-1559 replaced the old bidding-based fee system with a base fee that is burned, reducing ETH supply over time. For more on how gas fees work, see our dedicated guide.
EIP-3554 delayed the difficulty bomb, giving the network more time to complete its transition to proof-of-stake.
The London upgrade laid important groundwork for the Merge in September 2022, when Ethereum moved fully to proof-of-stake.
Since EIP-1559 launched, millions of ETH have been permanently removed from circulation through fee burning.
Introduction
The Ethereum London hard fork launched in August 2021, following the Berlin upgrade earlier that year. It introduced key changes to Ethereum's transaction fee system and block difficulty schedule, preparing 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 changed how users pay transaction fees and how miners earned revenue. Though the effects were uncertain early on, the London upgrade proved foundational to Ethereum's long-term development, culminating in the Merge in September 2022.
What Changed With the Ethereum London Update?
The London upgrade was a hard fork that included several Ethereum Improvement Proposals (EIPs). Two of them had the most significant impact:
EIP-1559: Redesigned the transaction fee mechanism by introducing a base fee model and a burn mechanism.
EIP-3554: Postponed the difficulty bomb to allow more time for Ethereum's transition to proof-of-stake.
These changes were part of Ethereum's broader strategy to move away from energy-intensive mining and toward a more sustainable consensus model.
What Is an EIP?
Ethereum Improvement Proposals (EIPs) are technical documents that outline new features or changes to the Ethereum protocol. Any developer or community member can write an EIP and submit it for discussion. Once the community reaches sufficient agreement, an EIP can be included in a scheduled network upgrade.
Each EIP must include a clear technical description, rationale, and documented community feedback. The process is intentionally open to encourage broad participation and peer review before any change is implemented on the live network.
What Is EIP-1559?
EIP-1559 changed the way users pay gas fees on Ethereum. Before this change, users had to manually bid for block space. This bidding system often led to overpayment during busy periods, since users had to estimate the right price without clear guidance.
EIP-1559 replaced this with a base fee set automatically by the protocol based on network demand. The base fee is burned, meaning it is permanently removed from circulation rather than paid to validators. This introduces a deflationary pressure on ETH supply whenever the network is heavily used.
Users can also include an optional priority tip to encourage validators to include their transaction faster. The base fee adjusts up or down with each block depending on whether the previous block was more or less than 50% full. This keeps blocks consistently utilized and makes fee estimation significantly more predictable.
Since launch, EIP-1559 has resulted in millions of ETH being permanently removed from circulation. The long-term effect on ETH supply depends on network activity levels.
What Is EIP-3554?
EIP-3554 delayed Ethereum's difficulty bomb, a mechanism built into the protocol to make PoW mining progressively harder over time. The goal of the difficulty bomb was to push Ethereum toward proof-of-stake by eventually making PoW economically unviable.
In 2021, the PoS transition was not yet ready. Developers used EIP-3554 to postpone the bomb and avoid disrupting the network before the upgrade was complete. This gave the Ethereum development community more time to finalize the PoS architecture.
Ethereum completed its transition to proof-of-stake with the Merge in September 2022. The difficulty bomb became irrelevant after the network stopped relying on PoW mining and is no longer a factor in network operation.
Ethereum Community Reaction
The London upgrade sparked considerable debate when it was announced. Miners were concerned about losing revenue through the base fee burn, since previously all fees went directly to miners. Some argued that only large mining operations would remain profitable under the new model, raising centralization concerns.
Users, on the other hand, largely welcomed the changes. Predictable fee estimation was a meaningful improvement for anyone regularly sending transactions or interacting with decentralized applications.
With Ethereum's full transition to proof-of-stake in 2022, those miner concerns became historical context. The network no longer relies on mining, and the ongoing deflationary effect of fee burning has become one of the more discussed aspects of ETH's monetary policy.
What Did the London Update Mean for Users?
Before the London upgrade, sending a transaction required manually setting a gas price. Users often had to guess how much to bid, and incorrect estimates could result in transactions being delayed or stuck.
After EIP-1559, wallets and applications could automatically estimate the base fee, removing most of the guesswork. You can still set a maximum fee cap to protect against sudden base fee spikes between when you submit a transaction and when it's included in a block. If the actual base fee is lower than your cap, the difference is refunded.
This system made Ethereum more accessible for everyday users and reduced the friction of sending transactions during high-demand periods.
FAQ
What was the Ethereum London hard fork?
The London hard fork was a scheduled network upgrade to Ethereum that launched in August 2021. It introduced EIP-1559, which changed how gas fees are calculated and introduced ETH burning, and EIP-3554, which delayed the difficulty bomb to buy time for the proof-of-stake transition.
What did EIP-1559 change about Ethereum gas fees?
EIP-1559 replaced the old auction-based fee system with a protocol-defined base fee. The base fee is burned with each transaction rather than paid to miners or validators. Users can add an optional priority tip to speed up processing. The base fee adjusts automatically based on block demand, making fees easier to predict.
Is ETH deflationary because of EIP-1559?
EIP-1559 introduced a deflationary mechanism by burning the base fee from every transaction. Whether ETH is net deflationary depends on how much new ETH is issued to validators versus how much is burned. During periods of high network activity, burn rates can exceed issuance. This relationship changes depending on network usage levels.
What happened to the Ethereum difficulty bomb?
The difficulty bomb was a mechanism designed to make PoW mining increasingly difficult over time, pushing the network toward proof-of-stake. EIP-3554 delayed it in August 2021. When Ethereum completed the Merge and moved to proof-of-stake in September 2022, the difficulty bomb became irrelevant. It is no longer a factor in network operation.
How did the London hard fork relate to the Merge?
The London upgrade was one of several preparatory steps before the Merge. EIP-3554 delayed the difficulty bomb to prevent network disruption while the proof-of-stake architecture was being finalized. EIP-1559 changed the fee model that carries over into Ethereum's current proof-of-stake operation. Together, they helped lay the groundwork for a smoother transition.
Closing Thoughts
The Ethereum London hard fork was a significant step in Ethereum's development, introducing fee-burning mechanics that continue to shape ETH's monetary dynamics today. Combined with the completion of the Merge in 2022, it helped transform Ethereum from a proof-of-work network into the proof-of-stake system that operates now. Understanding these upgrades helps explain how Ethereum's transaction model and ETH supply policy work.
Further Reading
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