What Is EIP-1559?

  • 2023 Sep 18

The EIP-1559 upgrade marks a significant shift in how gas fees operate on the Ethereum blockchain. Prior to this upgrade, users had to engage in open auctions to get their transactions processed by miners, a system known as a “first-price auction” where the highest bidder was the victor.

With EIP-1559, this cumbersome process is replaced by an automated bidding system, featuring a predetermined “base fee” for transaction inclusion in the next block. This base fee adapts to network congestion levels. Furthermore, users can expedite their transactions by offering a “priority fee” to miners for quicker processing.

EIP-1559 also brings a fee-burning mechanism into play. A portion of each transaction fee, specifically the base fee, is incinerated and taken out of circulation. This strategy aims to decrease the available supply of Ether, potentially bolstering the token’s value in the long run.

Interestingly, within just two months of implementing the London upgrade, the network had already burned more than $1 billion worth of Ether.