A popular crypto analyst identified on Twitter as Pentoshi has said that the much-awaited upgrade of Ethereum blockchain would significantly boost the price of ETH, the second-largest digital currency by market capitalization.
Additionally, the pseudonymous analyst says the approval of the Ethereum Improvement Proposal (EIP)-1559 would boost the price of ETH above $1000 resistance by 2021.
Pentoshi tweeted, “EIP-1559 in 9 months. ETH has the possibility to become deflationary. Current issuance is 4% per year, same as BTC. ETH 2 will [be] bringing [issuance] down to 1.5%. A halving of its own just without the label. ETH is needed for everything. Gas. DeFi. Alts. Staking. Uniswap. $1,000+ in 2021.”
How EIP-1559 Could Benefit Ethereum
EIP-1559 was first proposed in 2018. It’s designed to restructure the fee mechanism of the Ethereum network drastically.
The EIP-1559 upgrade will make all transactions have a standard fee named basefee and this will be the same for all users on the network.
According to the co-creator of Ethereum, Vitalik Buterin, the new fee mechanism comes with a lot of benefits for the network and users.
“Simplicity of wallet development (no/less need for complex fee estimation strategies). Privacy (less need to choose fees means less opportunity to reveal bits of info about yourself).”
Buterin also pointed out that the Ethereum Improvement Proposal (EIP)-1559 would possess a deflationary mechanism, where transaction fees would either be burnt or deposited into a long-term mining pool.
So, with these upcoming developments, ETH holders should be ready to witness an era of normal transactions, unlike the exorbitant Tx fees that have managed to reign supreme in the ecosystem in 2020.
Messari, a crypto intelligence platform revealed sometimes in October that Ethereum transaction fees notably outpaced Bitcoin transaction fees in two consecutive months:
“Ethereum fees have been higher than Bitcoin fees for 2 months straight. It’s longest streak ever.”