ETH into deflation? EIP 1559 officially entered the preliminary review, getting closer to one of the biggest upgrades in the history of Ethereum

Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), compiled by: Kyle, published with permission.

Editor's Note: This article comes from

Babbitt Information (ID: bitcoin8btc)

Babbitt Information (ID: bitcoin8btc)

Ethereum developers have begun reviewing algorithmic changes to network fee pricing, which could lead to a reduction in the total ethereum supply.statementEthereum Improvement Proposal (EIP) 1559 sets a base fee for the network, which is calculated algorithmically based on whether the network is congested, and will increase or decrease accordingly.

The purpose of the proposal is to reduce costs, especially when the network is congested, so that instead of overpaying for guessing network fees, people can use this algorithm to predict how much they will need to pay.

statement

, "This allows wallets to automatically set gas fees for users in a highly reliable manner."

In another change, this base fee is then burned instead of being distributed to miners as it is now, unless users add additional fees on top of this base fee.

At times, this can result in massive gas burns of around 5,000 eth per day or as much as 42,000 eth at peak times like September:

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Ethereum Daily Transaction Fee December 2020

Since the proposal adds a so-called soft limit of 10 million gas units followed by a hard limit of 20 million gas per block, the base fee is sufficient even during periods of network congestion, calculated according to the code for all parameters for quickly including transactions.

Therefore, while users save fees, holders will be able to benefit from burning fees and miners will get their own block rewards.

This is a win-win solution, although it is a complex proposal, it has been developed to the stage of preliminary review.