EIP-1559 Key Points
- EIP-1559, or Ethereum Improvement Proposal 1559, is a significant upgrade to the Ethereum blockchain.
- It was implemented as part of the London hard fork in August 2021.
- This proposal introduces a new transaction pricing mechanism that includes fixed-per-block network fee, which is burned and includes an optional tip paid to miners.
- EIP-1559 is designed to make transaction fees more predictable, improve the user experience, and potentially reduce the overall supply of Ether (ETH).
EIP-1559 Definition
EIP-1559, also known as Ethereum Improvement Proposal 1559, is a proposal to reform the Ethereum fee market. It was introduced to address issues with the existing fee structure, such as unpredictable and high transaction costs. The proposal introduces a mechanism that adjusts the base fee per gas to make transaction fees more predictable, while ensuring the network remains efficient.
What is EIP-1559?
EIP-1559 is a significant upgrade to the Ethereum blockchain that completely overhauls the way transaction fees work.
Before EIP-1559, users had to guess how much to pay miners to include their transaction in the next block.
With EIP-1559, the network sets a “base fee” for transactions, improving predictability.
This base fee is also burned, potentially leading to a decrease in the overall supply of Ether over time.
Who Proposed EIP-1559?
EIP-1559 was first proposed by Ethereum co-founder Vitalik Buterin, along with other Ethereum developers including Eric Conner and Rick Dudley.
It has since received widespread support from the Ethereum community.
When was EIP-1559 Implemented?
EIP-1559 was implemented as part of the London hard fork, which occurred on August 5, 2021.
The London hard fork was a planned upgrade to the Ethereum network that included several improvement proposals, including EIP-1559.
Where is EIP-1559 Applicable?
EIP-1559 is applicable on the Ethereum blockchain.
It affects all transactions made on the network, including those involving Ethereum’s native cryptocurrency, Ether (ETH), and other tokens built on the Ethereum platform.
Why was EIP-1559 Proposed?
EIP-1559 was proposed to address several issues with the Ethereum network’s fee structure.
Prior to EIP-1559, transaction fees were highly volatile and unpredictable, making it difficult to estimate the appropriate fee for a transaction.
By introducing a base fee and burning this fee, EIP-1559 aims to make fees more predictable and potentially reduce the overall supply of ETH.
How does EIP-1559 Work?
Under EIP-1559, each transaction includes a base fee, which is burned, and a tip for the miner.
The base fee is determined by the network based on demand for block space.
If a block is more than 50% full, the base fee increases, and if it is less than 50% full, the base fee decreases.
This dynamic adjustment of fees helps keep demand in check and ensures that the network operates efficiently.
