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EIP-1559

EIP-1559: Fee Market Change

EIP-1559 is one of the most important upgrades in Ethereum's history (included in the 2021 London hard fork), fundamentally changing Ethereum's transaction fee mechanism.

Problem Addressed

Before EIP-1559, Ethereum used a "first-price auction" model, where users bid Gas Price to compete for transaction inclusion. This led to: * High fee volatility: Difficult to predict an appropriate Gas fee. * Poor user experience: Frequently overbidding (wasting money) or underbidding (stuck transactions). * Inflationary pressure: All fees were paid to miners.

Mechanism and Principles

EIP-1559 introduced a dual-layer fee structure and dynamic block sizes:

  1. Base Fee:

    • The minimum fee a transaction must pay.
    • Algorithmically adjusted: Automatically adjusts based on the previous block's utilization rate. If utilization > 50%, the Base Fee increases; if < 50%, it decreases. This makes fees highly predictable.
    • Burn: The Base Fee is not paid to validators but is directly burned (permanently removed from circulation), creating deflationary pressure on ETH.

  2. Priority Fee (Tip):

    • An additional fee users pay to validators to incentivize them to prioritize their transactions.

  3. Max Fee Per Gas:

    • The maximum price per unit a user is willing to pay (Base Fee + Priority Fee). A transaction is only executed when Base Fee + Priority Fee <= Max Fee.

  4. Elastic Block Size:

    • The target block size is 15 million Gas, with a maximum cap of 30 million Gas. This allows the network to handle short-term bursts of transaction demand.

Key Features

  • Better user experience: Wallets can more accurately estimate Gas fees, and users don't need to manually bid.
  • ETH deflation: As network usage increases, more ETH is burned, potentially leading to a decrease in total ETH supply (Ultra Sound Money).
  • Spam prevention: The existence of the base fee increases the cost of sending spam transactions.