● Ethereum’s ‘EIP 1559” Green-lit for July
● US Senate Approves $1.9T Stimulus Plan; Now Returns to the House for Vote
Hello and welcome to another week’s edition of Overbit Insights. In our first biggest story of the week is the proposed network upgrade for Ethereum. Over the past months and even years, the most significant criticism for Ethereum has been related to its lack of scalability, mostly associated with its fees.
We all saw during last year’s Defi summer the Ethereum network was completely congested, almost to a halt. With DeFi exploding, this brought ETH’s scalability issues right into the spotlight. This, of course, led to many critics of Ethereum questioning the network’s long-term capability, as if Ethereum becomes the world’s supercomputer, it won’t be able to handle a few hundred million users concurrently – Cue ETH 2.0.
The problem with ETH 2.0 is it is months away or years away, so users and developers of ETH are looking for a short-term patch or “band-aid for the network”, and that’s where EIP 1559 comes in.
The ‘EIP 1559’ Fee Market Overhaul is now green-lit for July, even with many Ethereum miners against the proposal. However, that hasn’t stopped developers from scheduling the upgrade for July.
The new EIP 1559 proposal changes how transactions are processed completely. As it stands now, a user sends a gas fee to a miner for a transaction to be included in a block. The gas fee will directly be sent to the network as a kind of “burn” called a base fee, with only an optional tip charged to miners under this new proposal.
The burn fee is calculated algorithmically to make it simpler for users to pay a reasonable fee. On the other side, as the plan moved closer to main-net, miners and mining pools have been rallying against it.
A prominent trader and Twitter user, CryptoCobain, had this to say about the upcoming network adjustment: “EIP 1559 agreed by ETH core and miners opposing. It is so hype. I hope so badly we hard fork and miners try to prop up the price of Ethereum Cash so I can sell them all of my ETHC before they capitulate back to main chain.”
Translation, this proposal could become so contentious that ETH hard forks, with miners staying on the original chain before switching back to the main chain because that’s where the users are. It’s hard to say what will happen, but it will definitely be an infamous month for Ethereum.
To close out today’s edition of Overbit Insights, we pivot towards the United States, where the long-talked-about financial stimulus saga has finally come to a close.
On Saturday, 6 March, the U.S. Senate finally concluded and voted in favour of President Biden’s $1.9 trillion Covid-19 relief package. The bill came down to a narrow party-vote line, with the Democrats eeking out the bill by a one-vote margin. This conclusion comes after days of intense voting and so-called ‘reconciliation in Washington D.C., in which members of congress suggest, approve and reject amendments on the package. The bill is now headed back to the House of Representatives for approval, which is expected sometime next week.
The official numbers on relief amounts have varied dramatically with the news cycle, but it seems the final agreement will provide $300 in weekly unemployment benefits through September, send a one-time $1,400 payment to qualifying Americans, and direct $350 billion to state and local governments. Measures that were negotiated for but did not end up in the package included a raised federal minimum wage to $15, something Biden and VP Kamala Harris both championed in their campaigns.
It’s difficult to say precisely how this stimulus package will affect the United States and its citizens in the long term, given the nation-state banking systems’ complexity.
Nevertheless, it seems inevitable that a short-term relief will be felt for citizens, and possibly especially so for markets, given how stocks, equities and commodities responded to previous stimulus packages in the coronavirus era. That being said, all eyes will be on Bitcoin and cryptocurrency going forward, evaluating how the asset class performs against continued ‘quantitative easing’. Given the stimulus package precedent, it’s safe to say many investors may have their eyes on Bitcoin in the near future as well.
As always, thanks for reading Overbit Insights. Here at Overbit.com, we’ll continue to deliver the news that matters most in markets.