What is EIP-1559?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
EIP-1559 changed how Ethereum charges for transactions, shipping with the London upgrade in August 2021. Fees split into a protocol-computed base fee, which is burned, and an optional priority fee. Estimating costs became more predictable, and part of issuance is now offset by the burn.
Key points
- Splits fees into a base fee and a priority fee
- The base fee is burned rather than paid to anyone
- It adjusts automatically with block utilisation
- Activated in the London upgrade of August 2021
Definition
An Ethereum specification that separates transaction fees into a protocol-calculated base fee, which is burned, and a priority fee paid to the block proposer. It went live with the London upgrade.
Before the change, users named a gas price and the highest offers won — a plain auction that made the right bid hard to judge and led to overpaying or to transactions never being picked up. EIP-1559 has the protocol compute a base fee from how full recent blocks were, and users follow it.
The base fee rises when blocks exceed their target usage and falls when they fall short, with a cap on how much it can move per block, so even a surge climbs in steps. Users set a maximum they are willing to pay, and anything above the actual base fee is refunded.
Its distinctive feature is that the base fee is burned rather than paid to the proposer, which removes the incentive to inflate fees with self-dealt transactions. A side effect is that some newly issued ETH is offset by the burn, with the net change depending on congestion.
Watch out for
- · Set your maximum too low and the transaction stalls whenever the base fee climbs past it
- · The amount burned moves with congestion, so do not state supply trends as a fixed rule
- · Not every chain implements this scheme, so carrying over the same settings can cause failures