hey, my name is christopher and I am a vue and flutter developer also interested in blockchain who loves to write the things I am learning
hey, my name is christopher and I am a vue and flutter developer also interested in blockchain who loves to write the things I am learning
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EIP-1559 is an upgrade that happened to ethereum in 2021 and it was an important upgrade that had a huge impact in the ethereum community since it aimed to solve a lot of problems
in this thread I will explain the details of this upgrade
1) gas volatility and overpaying problem
before EIP-1559, miners usually prioritized transactions with the highest gas prices. user must accept a price suggested by the wallet or use 3rd party gas-market estimations like Gas Price Tracker.
there wasn’t one source of truth and users didn’t know what gas price would guarantee inclusion in the next block, Therefore, they had to stab in the dark when submitting a transaction and often ended up paying more than necessary
also the estimated gas price could fluctuate quickly from 10 to 100 (and more) and each time a user-submitted a transaction, a different number had to be input, with EIP-1559 the volatility of gas price has reduced significantly
imagine this scenario:
John has just spotted a great opportunity and wants his transaction to be executed as soon as possible. He checks current gas prices to see that a rapid transaction requires 50 GWEI. He expects gas prices to rise as more users may want to seize the same opportunity, therefore, he uses 100 GWEI when submitting his tx. The tx is included in the first block and John pays 100 GWEI for each unit of gas it consumed. However, it turns out that such a high gas price wasn’t necessary. Even with 50 GWEI the tx would be included in the first block – the gas spike John anticipated didn’t happen. As a result, John overpaid 50 GWEI.
EIP-1559 introduced the following changes to the solve this problem:
The Ethereum protocol algorithmically determines the gas price based on the current demand on the network (no 3rd party included).
Block space is variable and can be doubled during sudden spikes in demand to level out gas prices.
2) Inflation
Before EIP-1559, all the fees paid by users went to miners, The fees were effectively washed back and forth between the participants of the network and high activity didn’t mean anything for the price
with EIP-1559 a big portion of the fees gets burned, this makes ETH the asset deflationary since more activity on the network means more ETH getting burned which also means less ETH in circulation that may result in an increase in price
EIP-1559 is an upgrade that happened to ethereum in 2021 and it was an important upgrade that had a huge impact in the ethereum community since it aimed to solve a lot of problems
in this thread I will explain the details of this upgrade
1) gas volatility and overpaying problem
before EIP-1559, miners usually prioritized transactions with the highest gas prices. user must accept a price suggested by the wallet or use 3rd party gas-market estimations like Gas Price Tracker.
there wasn’t one source of truth and users didn’t know what gas price would guarantee inclusion in the next block, Therefore, they had to stab in the dark when submitting a transaction and often ended up paying more than necessary
also the estimated gas price could fluctuate quickly from 10 to 100 (and more) and each time a user-submitted a transaction, a different number had to be input, with EIP-1559 the volatility of gas price has reduced significantly
imagine this scenario:
John has just spotted a great opportunity and wants his transaction to be executed as soon as possible. He checks current gas prices to see that a rapid transaction requires 50 GWEI. He expects gas prices to rise as more users may want to seize the same opportunity, therefore, he uses 100 GWEI when submitting his tx. The tx is included in the first block and John pays 100 GWEI for each unit of gas it consumed. However, it turns out that such a high gas price wasn’t necessary. Even with 50 GWEI the tx would be included in the first block – the gas spike John anticipated didn’t happen. As a result, John overpaid 50 GWEI.
EIP-1559 introduced the following changes to the solve this problem:
The Ethereum protocol algorithmically determines the gas price based on the current demand on the network (no 3rd party included).
Block space is variable and can be doubled during sudden spikes in demand to level out gas prices.
2) Inflation
Before EIP-1559, all the fees paid by users went to miners, The fees were effectively washed back and forth between the participants of the network and high activity didn’t mean anything for the price
with EIP-1559 a big portion of the fees gets burned, this makes ETH the asset deflationary since more activity on the network means more ETH getting burned which also means less ETH in circulation that may result in an increase in price
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