What impact will the advent of EIP 1559 bring?
In the early hours of this morning, Ethereum developer Tim Beiko said that the Ethereum improvement proposal EIP-1559 has been basically completed, and now only needs to be tested for block size, which is expected to be launched this summer.
Beiko said that the proposal has already been implemented in the Besu, Geth and Nethermind clients, while the OpenEthereum client has not yet started. It is reported that EIP-1559 attempts to reduce transaction costs by introducing fixed fees and destruction mechanisms.
EIP 1559, first proposed by Vitalik in 2018, is expected to make the fee market on the Ethereum blockchain more predictable and ease congestion.
The launch of EIP 1559 has become an imminent demand. Now that the price of Ethereum has increased and the number of users has increased, the GAS fee has exceeded the acceptable range of retail investors, making many people return to centralized exchanges again.
So, what is EIP 1559? Can it really make such a huge difference?
Ethereum Improvement Proposal (EIP) 1559 is a standard developed to address many of these issues. Its main innovation is the introduction of a base fee (gas fee per unit) associated with each block. Due to network congestion, this fee increases or decreases, pushing network traffic back to the target level.
Under EIP-1559, transaction creators specify a fee cap (the most they are willing to pay per unit of gas spent to include this transaction). If the fee cap is less than the base fee of the module, it cannot be included in the module. The transaction creator also specifies a tip (also in units of gas); this tip is collected by the block miners.
The minimum fee paid by the transaction creator is the fee cap and base fee plus tip, multiplied by the gas (unit price) fee used for the transaction, rather than a unit price auction. All income in the base fee is consumed, creating deflationary pressure that allows the entire network to compensate for resources spent executing transactions.
For example, when the utilization rate of the Block Gas Limit of a block is higher than 50%, the basic gas price will increase to 112.5%; on the contrary, if the utilization rate is lower than 50%, the basic gas price will Will be reduced to 87.5% of the original.
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.
On January 5, Filecoin founder Juan published the article "EIP-1559 in Filecoin", which stated that Filecoin has incorporated EIP-1559 into its core protocol and made small-scale adjustments. At present, EIP-1559 has been implemented and launched on the Filecoin main network, and the daily consumption of FIL due to network transactions is about 100,000 to 150,000. So far, EIP-1559's base fee mechanism has done a good job of keeping the network capacity at 100 percent.
In the Filecoin network, the concept of gas is used to measure the computing resources required to perform a given on-chain transaction. The costs of these resources need to be paid for, resulting in many decisions having to be made around who should bear these costs and how transactions need to be prioritized for resource consumption.
Although conceptually simple, such approaches have been shown to have a number of drawbacks. The operation of first-price auctions can be complex and can result in significant overpayment by bidders. They can also cause undesirable behavior during periods of network congestion.
The system detailed above also rewards miners for all gas fees, ignoring the fact that non-mining participants in the network must also spend resources to process each transaction.
From Filecoin's attempts, we can see the pain points, and of course it is also related to its own direction. Under the current high gas fee of Ethereum, EIP 1559 may not be the best solution, nor is layer 2.
But after all, before the release of 2.0, the use of this solution has won the interests of many users, so EIP 1559 is still necessary for its existence. If it can be launched normally this summer, it will surely lead to the introduction of some projects.
