What is EIP-1559?

EIP-1559, activated in August 2021, aims to improve gas fee efficiency and predictability on the Ethereum network by introducing a new transaction fee model with a base fee that is burned and a priority fee paid to miners.

Feb 20, 2025 at 07:18 pm

Key Points of EIP-1559

• EIP-1559 is a major upgrade to the Ethereum network that aims to improve gas fee efficiency and predictability.
• EIP-1559 was proposed by Ethereum co-founder Vitalik Buterin in April 2019 and was activated on August 5, 2021.
• EIP-1559 introduces a new transaction fee model that replaces the existing first-price auction system.
• Under EIP-1559, transaction fees are divided into two components: a base fee and a priority fee.
• The base fee is automatically adjusted based on network demand and is burned, thus reducing the supply of ETH.
• The priority fee is paid to miners and serves as an incentive for them to prioritize transactions.
• EIP-1559 also includes a new block size calculation mechanism that aims to improve network throughput.

What is EIP-1559?

EIP-1559, also known as the London hard fork, is a major upgrade to the Ethereum network that aims to improve gas fee efficiency and predictability. It was proposed by Ethereum co-founder Vitalik Buterin in April 2019 and was activated on August 5, 2021.

Prior to EIP-1559, the Ethereum network used a first-price auction system to determine transaction fees. Under this system, users were required to bid on the amount of gas they were willing to pay to have their transactions processed. This often led to high gas fees during periods of high network congestion, making it difficult for users to predict the cost of sending transactions.

EIP-1559 introduces a new transaction fee model that replaces the first-price auction system. Under EIP-1559, transaction fees are divided into two components: a base fee and a priority fee.

The base fee is automatically adjusted based on network demand. It is calculated by measuring the difference between the target block size and the actual block size. If the actual block size is below the target, the base fee decreases. If the actual block size is above the target, the base fee increases.

The base fee is burned, which means that it is removed from circulation and cannot be used to pay for transactions. This has the effect of reducing the supply of ETH and making it more valuable.

The priority fee is paid to miners and serves as an incentive for them to prioritize transactions. Users can choose to set a higher priority fee to ensure that their transactions are processed more quickly.

EIP-1559 also includes a new block size calculation mechanism that aims to improve network throughput. Under this mechanism, the block size is adjusted based on the number of transactions in the block. If the block is full, the block size is increased. If the block is not full, the block size is decreased.

This mechanism helps to ensure that the Ethereum network is able to process a consistent number of transactions per block, even during periods of high network congestion.

How does EIP-1559 affect gas fees?

EIP-1559 has had a significant impact on gas fees on the Ethereum network. Prior to EIP-1559, gas fees were highly unpredictable and often reached prohibitively high levels during periods of high network congestion. Under EIP-1559, gas fees have become more stable and predictable.

The base fee, which is the largest component of the transaction fee, is automatically adjusted based on network demand. This helps to ensure that gas fees remain at a reasonable level, even during periods of high congestion.

The priority fee, which is the smaller component of the transaction fee, is paid to miners and serves as an incentive for them to prioritize transactions. Users can choose to set a higher priority fee to ensure that their transactions are processed more quickly. This can be useful for time-sensitive transactions, such as those involving large amounts of money or those that are required for a particular deadline.

Overall, EIP-1559 has had a positive impact on gas fees on the Ethereum network. Gas fees have become more stable and predictable, making it easier for users to budget for the cost of sending transactions.

What are the benefits of EIP-1559?

EIP-1559 offers a number of benefits to the Ethereum network, including:

• Improved gas fee efficiency: EIP-1559 introduces a new transaction fee model that is more efficient than the previous first-price auction system. This helps to reduce the cost of sending transactions on the Ethereum network.
• Increased gas fee predictability: EIP-1559's new transaction fee model makes gas fees more predictable. Users can now estimate the cost of sending a transaction based on the current network demand.
• Reduced block size: EIP-1559's new block size calculation mechanism helps to reduce the size of blocks on the Ethereum network. This improves the network's efficiency and makes it possible to proces