Ethereum, the blockchain that runs ether, the second-largest cryptocurrency under bitcoin, will undergo a major upgrade this week.
Currently, users must bid for how much they’re willing to pay to have their ether transaction picked up by a miner, which can be extremely costly. Under EIP-1559, this process will be handled by an automated bidding system with a set fee amount that fluctuates based on how congested the network is.
“This is great for Ethereum casual users and makes the protocol less intimidating to use,” Eric Conner, a co-author of EIP-1559 and co-founder of EthHub, tells CNBC Make It.
Another major change under EIP-1559 is that part of every transaction fee will be burned, or removed from circulation, which will begin to reduce the supply of ether and potentially boost its price.
That’s why, in part, “EIP-1559 is one of the most significant upgrades to Ethereum since the network’s launch,” says Meltem Demirors, CoinShares chief strategy officer.
Here’s what investors should know as the upgrade rolls out.