What market participants have been waiting for has finally happened: the London hardfork has been successfully carried out on the Ethereum blockchain.
It was a surprise that the market reacted with explosive growth. Previously, some analysts stated that the impact of the hardfork has already been factored into the price of ETH and other altcoins. However, it seems that some doubts still remained that such an important network upgrade would go smoothly, despite the fact that the hardfork had already been successfully carried out on the testnets.
Now the market is making up for the lost time. Along with Ethereum, the fastest growing altcoins are those associated with the launch of DeFi projects on the Ethereum platform, for example, Uniswap (UNI). As well as coins of the competitive platforms such as Binance Coin (BNB) and TRON (TRX).
The Ethereum network upgrade promises major changes in the crypto industry. Just on the first day, 4.4 thousand ETHs worth more than $12.2 million were burned. This is how the deflationary model began to operate. Part of the commissions that miners previously got is burned. Gradually, this will make ETH mining “irrelevant” and lead to the transition from the Proof-of-Work consensus algorithm to Proof-of-Stake. On the news of the hardfork, ETH rose by more than 7%. Earlier, on expectations of a hardfork, Ethereum also grew and added 22% to the price for the week.
Investors are also attracted by the change in the model for calculating fees. After the hardfork, the volatility of fees is expected to decrease. It scared and annoyed developers and investors of DeFi projects throughout the year. Commissions will become low and, most importantly, predictable. This will strengthen Ethereum’s position as the best platform for DeFi projects. The amount of funds blocked in these projects will grow. As a result, ETH will become number one in terms of capitalization. Just now ETH’s market share is approaching 20%. Daily volume increased by more than 1.7 times, from $18 billion to $31.1 billion.
Due to the introduction of a deflationary model and a decrease in fees, the price of ETH by the end of the year may reach $5-6K, and in the near future, Ethereum will rise to the level of $3-3.5K, as experts predict. Ethereum founder Vitalik Buterin called London hardfork the most significant network change since 2015.
The successful hardfork confirms that the blockchain transformation is proceeding in accordance with the roadmap. The transition to an energy-efficient Proof-of-Stake consensus will also be carried in time and successfully. As a result of the upgrade to the Ethereum 2.0 protocol, the power consumption of the network will be reduced by 99%, Buterin noted.
High power consumption of distributed networks is one of the main arguments of the opponents of the crypto industry. A decrease in energy consumption by almost 100 times will contribute to the growth of cryptocurrency’s popularity. In addition, protocol 2.0 enables network scalability and makes it more user-friendly.