Conflux Advanced Course: Understanding EIP-1559 in One Article

DeFi’s annualized rate of return has exceeded tens of thousands, and in the past third quarter, Ethereum’s Gas Price has been crazily increased. From 20 GWei at the beginning of the year, it exceeded 1,000 GWei after Uniswap airdropped iPhone 12 to everyone, a 50-fold increase Crazy to the extreme.

The high fees make the dream of DeFi open and inclusive finance nowhere to be put. After CryptoKitties blocked Ethereum in 2017, how to reduce Ethereum fees has once again become a hot topic after two years. This time, in addition to the Layer 2 solution, another more refined optimization solution has come into view, namely EIP-1559.

In the Ethereum network, there is an upper limit on how many instructions each block can handle, which is what we call the Block Gas Limit. One of the main reasons for restricting the Block Gas Limit is that when it is higher than a threshold, it may cause the Ethereum FullNode synchronization block speed to be unable to catch up with the block generation speed, resulting in the network gradually becoming unavailable.

EIP-1559 is an improvement proposal for the Ethereum transaction fee mechanism jointly proposed by Vitalik Buterin, the co-founder of Ethereum, and Eric Conner, the founder of ethhub_io. , when the demand is low, reduce the Block Gas Limit, so that the average Block Gas Limit for a period of time remains unchanged, but it can dynamically cope with short-term peak demand.

The generation of basic handling fees for each transaction is part of the ecological prosperity of Ethereum, and all participants should share this part of the benefits. Therefore, in EIP-1559, all basic handling fees will be directly burned to reduce the supply of ETH in the entire network. Since the basic handling fee is burned, miners will not be willing to package transactions. All users who are anxious to send transactions to the chain can increase the tip in the transaction and encourage miners to package their own transactions as soon as possible.

The generation of basic handling fees for each transaction is part of the ecological prosperity of Ethereum, and all participants should share this part of the benefits. Therefore, in EIP-1559, all basic handling fees will be directly burned to reduce the supply of ETH in the entire network. Since the basic handling fee is burned, miners will not be willing to package transactions. All users who are anxious to send transactions to the chain can increase the tip in the transaction and encourage miners to package their own transactions as soon as possible.

EIP-1559 was proposed in April 2019, 18 months have passed, and it is still unknown when it will be integrated into Ethereum. The slow update speed of Ethereum's ecology is once again highlighted.

The reason why EIP-1559 is important is that it can bring the expected user experience and break the current unfriendly status quo of the charging market.

In the next issue, we will introduce whether EIP-1559 is applicable and how to implement it in the Conflux network environment.