Ethereum software upgrade activated; ether, bitcoin down 4-5%

Ethereum, the second-largest blockchain, went through a major software upgrade on Thursday, which is expected to stabilize transaction fees on the network and potentially reduce supply of the ether token.

The adjustment called Ethereum Improvement Proposal (EIP) 1559 changes the way transactions are processed on Ethereum by providing clear pricing on transaction fees in ether paid to miners to validate transactions and “burning” a small amount of those tokens. The burned tokens will be permanently taken out of circulation.

EIP 1559 is part of a batch of software upgrades called London. Thursday’s Ethereum event is called a London hard fork, which means miners or developers have to download London to remain connected to the network.