The Ethereum network is advancing steadily toward its next major milestone—the Berlin upgrade—marking a pivotal moment in its ongoing evolution. Scheduled to go live at block height 12,244,000, the upgrade is expected to activate around April 14, 2021, based on current block production rates. This upgrade sets the stage for deeper changes ahead, particularly the controversial London hard fork later in the year, which will introduce EIP-1559—a proposal poised to reshape Ethereum’s transaction fee market.
What’s Included in the Berlin Upgrade?
The finalized Berlin upgrade incorporates four key Ethereum Improvement Proposals (EIPs), each designed to enhance network efficiency and prepare the ecosystem for future scalability improvements.
- EIP-2565 (ModExp Gas Cost): Reduces the gas cost of the ModExp precompile, improving performance for certain cryptographic operations used in layer-2 solutions and privacy protocols.
- EIP-2718 (Typed Transaction Envelope): Introduces a new transaction format that supports future transaction types, enabling backward-compatible upgrades and smoother integration with wallets and infrastructure.
- EIP-2929 (Gas Cost Increases for State Access Opcodes): Increases the gas cost of accessing storage slots, mitigating potential denial-of-service (DoS) attack vectors by making state-expansion attacks more expensive.
- EIP-2930 (Optional Access Lists): Complements EIP-2929 by allowing users to specify which addresses and storage keys their transactions will access, reducing gas costs when used effectively.
Notably, an earlier version of the upgrade included additional proposals, but these were removed to streamline deployment and minimize risk. The current package reflects a cautious, incremental approach—typical of Ethereum’s conservative upgrade philosophy.
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The Road to London: Why EIP-1559 Is a Game-Changer
While the Berlin upgrade lays technical groundwork, all eyes are now turning toward the upcoming London hard fork, expected in July 2021. At its core is EIP-1559, a radical overhaul of Ethereum’s transaction fee mechanism that has sparked intense debate across the community.
How EIP-1559 Works
EIP-1559 replaces the traditional auction-based gas pricing model with a more predictable system:
- Base Fee: A dynamically adjusted fee burned (permanently removed from circulation) with every transaction. It scales with network congestion.
- Priority Fee (Tip): An optional tip paid directly to miners to incentivize faster inclusion during peak times.
This dual-fee structure aims to eliminate the guesswork involved in setting gas prices, offering users clearer cost expectations and reducing overpayment.
Benefits of EIP-1559
- Reduced Volatility: Smoother fee adjustments help prevent sudden gas spikes.
- User Control: Users no longer need to outbid others; they can simply add a tip if urgency demands.
- Deflationary Pressure: Since base fees are burned, high network usage could lead to net deflation of ETH supply—potentially increasing scarcity and long-term value.
Miner Resistance and Economic Implications
Despite its benefits, EIP-1559 faces strong opposition from a significant portion of the mining community. According to data from Coin Metrics, Ethereum miners earned over $1.3 billion in February 2021 alone, with nearly half coming from transaction fees.
With EIP-1559 set to burn base fees, miners stand to lose a substantial portion of their income. Eight major mining pools—including Ethermine and BitFly—representing about 30% of the network's hashrate, have publicly voiced resistance.
However, core developers remain committed. During a developer call on March 5, 2021, it was confirmed that EIP-1559 would be included in the London hard fork regardless of miner sentiment. This decision underscores a growing shift in power dynamics—from miners to protocol developers and users.
"EIP-1559 shifts control of transaction pricing from miners to users, addressing one of Ethereum’s most persistent pain points: unpredictable gas fees."
As the Berlin upgrade completes, tensions around EIP-1559 are likely to intensify. While no chain split has been confirmed, the possibility remains if miner discontent escalates into coordinated action.
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Market Reaction: Bitcoin and Ethereum Maintain Strong Momentum
Bitcoin (BTC): Consolidation at Record Highs
According to market data, BTC experienced intraday volatility but maintained bullish momentum. Prices dipped briefly to $53,022 before rebounding sharply to $55,429—nearly erasing earlier losses. On the hourly chart, support held near $53,430, a key level from prior consolidation.
Daily candles show four consecutive green bars, signaling sustained buying pressure. Traders are now watching for a breakout above $55,800—the previous resistance zone—which could open the door to new all-time highs.
Ethereum (ETH): Five-Day Rally Amid Upgrade Hype
ETH followed a similar pattern, dropping to $1,758 before climbing to $1,840. The recovery reclaimed half of the morning’s losses and brought price back toward the upper boundary of its recent range. With five straight daily gains, ETH remains in a dominant uptrend.
Strong investor sentiment is supported by growing confidence in Ethereum’s roadmap, including both the Berlin upgrade and the promise of EIP-1559.
Derivatives Market Overview
Contract data indicates stable open interest for both BTC and ETH, though trading volume has declined slightly—suggesting reduced leverage activity and a calmer derivatives market. BTC futures basis remains steady, while ETH’s has seen a small dip.
DeFi Activity Holds Steady Despite Volatility
Decentralized finance continues to show resilience:
- Total Value Locked (TVL): $63.75 billion
- True TVL (excluding synthetic assets): $47.95 billion
- Daily DeFi Trading Volume: $2.02 billion
HBTC led gains with a 12.81% rise, while SushiSwap saw a 23.57% drop in volume—possibly due to shifting liquidity toward newer yield farms or cross-chain alternatives.
These figures reflect continued trust in Ethereum-based protocols despite rising gas costs and competitive pressure from alternative blockchains.
Frequently Asked Questions (FAQ)
Q: What is the main goal of the Ethereum Berlin upgrade?
A: The Berlin upgrade improves network efficiency and security by optimizing gas costs and introducing flexible transaction formats, setting the foundation for future upgrades like EIP-1559.
Q: How does EIP-1559 change Ethereum’s fee model?
A: It introduces a base fee that adjusts automatically and gets burned, plus an optional tip for miners. This makes fees more predictable and reduces long-term ETH supply.
Q: Will EIP-1559 cause a chain split?
A: While some miners oppose it, there’s no confirmed plan for a hard fork. However, sustained resistance could lead to community fragmentation if not managed carefully.
Q: Does burning ETH make it deflationary?
A: Yes—under high usage conditions, more ETH may be burned than issued as block rewards, leading to net deflation and potential upward price pressure.
Q: How do upgrades like Berlin affect regular users?
A: Most changes are backend improvements. Users benefit indirectly through lower fees, faster transactions, and greater network stability over time.
Q: Is now a good time to invest in ETH before London?
A: Many analysts believe EIP-1559 could be bullish due to its deflationary mechanics. However, short-term volatility around upgrades is common—always do your own research.
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Final Thoughts
The Berlin upgrade represents another step forward in Ethereum’s journey toward scalability and usability. While technically modest, it clears the path for transformative changes like EIP-1559. As developer vision clashes with miner economics, the outcome will shape not just Ethereum’s future—but the broader governance model of decentralized networks.
With strong price momentum and growing DeFi adoption, Ethereum remains at the center of innovation in blockchain technology. Whether EIP-1559 unites or divides the community will become clear in the months ahead—but one thing is certain: change is coming.