In permissionless networks like Ethereum, it is relatively easy for a user to craft many different simultaneous transactions for submission to the network in a short period of time. If message traffic is heavy enough, individual nodes may become overwhelmed causing the network to slow down and potentially become unusable.

In order to prevent this, Ethereum protects resources (compute, bandwidth, and storage) by limiting the maximum size of each block. In order to value this blockspace, an auction happens every 12 seconds. Users that would like to get a transaction included in a block bid using an ETH unit of measurement called gwei for the amount of compute units required for their transaction. We call these compute units “gas”. Ethereum blocks are limited to 30 million gas, and the value of each block can vary depending on the current demand.

EIP 1559 modified the auction mechanism so that an algorithmically determined base fee is required for each transaction looking to purchase blockspace. This fee is burned. Users requiring priority execution can add a tip for the block producer.

This simple market does a great job of limiting spam transactions, since any user that wants to send many transactions would need to compete with other legitimate users also looking for blockspace.

In a permissionless setting, the network must protect itself against spam. Spam prevention mechanisms that require users to bid for scarce resources, such as a blockspace, must be balanced against expectations for user’s willingness to pay. Incorrect assumptions here may result in a spam prevention mechanism that prevents any use at all.

In permissionless networks like Ethereum, it is relatively easy for a user to craft many different simultaneous transactions for submission to the network in a short period of time. If message traffic is heavy enough, individual nodes may become overwhelmed causing the network to slow down and potentially become unusable.

In order to prevent this, Ethereum protects resources (compute, bandwidth, and storage) by limiting the maximum size of each block. In order to value this blockspace, an auction happens every 12 seconds. Users that would like to get a transaction included in a block bid using an ETH unit of measurement called gwei for the amount of compute units required for their transaction. We call these compute units “gas”. Ethereum blocks are limited to 30 million gas, and the value of each block can vary depending on the current demand.

EIP 1559 modified the auction mechanism so that an algorithmically determined base fee is required for each transaction looking to purchase blockspace. This fee is burned. Users requiring priority execution can add a tip for the block producer.

This simple market does a great job of limiting spam transactions, since any user that wants to send many transactions would need to compete with other legitimate users also looking for blockspace.

In a permissionless setting, the network must protect itself against spam. Spam prevention mechanisms that require users to bid for scarce resources, such as a blockspace, must be balanced against expectations for user’s willingness to pay. Incorrect assumptions here may result in a spam prevention mechanism that prevents any use at all.