A deep dive into EIP-1559 and what it means for Ethereum
In mid-April, the Berlin upgrade went live.The hard fork included several Ethereum Improvement Proposals (EIPs), particularly EIPs-2718, 2929, 2565, and 2930.Sadly, it didn’t include the much-anticipated EIP-1559, which has been touted as the Holy Grail to solving the network’s high transaction fees.
According to Ethereum devs, EIP-1559 may launch in July.But contrary to popular belief, EIP-1559 will not solve the network’s congestion or high gas fees.
So, if EIP-1559 will not solve the pressing issues of the Ethereum blockchain what is it for then?
For starters, the EIP-1559 proposal seeks to introduce a concept of “block elasticity.” At its core, the proposal seeks to reform the Ethereum fee market by introducing two key changes.First, the current gas limit will be replaced by two values, a “long-term average target” that is equal to the current gas limit, and a “hard per-block cap,” which is twice the current gas limit.
Secondly, the proposal introduces a base fee that is adjusted on a block-by-block basis and compulsory for transactions to pay.Furthermore, the base fee will be burned, making Ethereum deflationary.The Ethereum team explained in an EIP-1559 FAQ that:
“Essentially, instead of all of the short-term volatility in demand for transaction space within a block translating into volatility in transaction fees, some of the volatility instead translates into volatility in block size.”
Does EIP-1559 solve the gas fee concerns?To an extent, EIP-1559 might be able to lower Ethereum’s high gas fees.However, it is not enough to solve all the problems.Abdelhamid Bakhta, one of the six primary authors of EIP-1559 told crypto news site Cointelegraph that:
Transaction fees are a function of supply and demand.And technically, there is no increase in the average available block space because the base fee mechanism is designed to tend to half of the maximum block capacity.
So, the short answer is no, the upgrade will NOT be the long-term solution that Ethereum needs to resolve its scalability problems.
Bakhta was quick to add that as the network welcomes more layer-two scaling solutions, the problem of high network fees and congestion will eventually be eliminated.
Ethereum miners have expressed their disapproval for the upcoming upgrade, going as far as threatening to move their hash power elsewhere.In an ultimate show of force, some miners decided to perform a hard fork of the current chain to retain PoW mining.
In conclusion, users of the Ethereum blockchain should not expect that all their gas concerns will suddenly vanish with EIP-1559.
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