Layer by Layer Issue 16: Governance Update

Layer-1 blockchain upgrades marked some of the most impactful moments for crypto and DeFi in 2021. Throughout the year, these updates have highlighted the fact that modern blockchains are constantly evolving, whether scaling out original visions for their ecosystems or adapting to the shifting demands of today’s users and market environment. 

In August, Ethereum’s EIP-1559 upgrade brought sweeping changes to the smart contract platform that continues to boast the highest total value locked (TVL) among L1s. The upgrade introduced a new transaction fee structure to Ethereum, giving users more flexibility in customizing gas fees, and also introduced a new burn mechanism that lowers net ETH issuance from mining blocks. Ethereum’s monetary policy is now dependent on a number of factors, including network demand and the associated fees burned.