3 Notes On EIP-1559 And How It Affects Ethereum

CryptoMode Ethereum price watch EIC-2612 Ethereum Addresses in the Loss EIP-1559

The Ethereum network is slated to undergo a significant network upgrade in a few months. Through the London hard fork, the developers will release several improvements. One of those improvements is EIP-1559, which may not necessarily make everyone happy.

A Change In Ethereum TX Fees

The biggest change coming through EIP-1559 is adjusting how users pay transaction fees. More specifically, the current fees are issued to miners who validate transactions and include them in future network blocks. That situation will come to change, which is a good sign. Using Ethereum is often overly expensive, and transactions can take hours to process unless users cater to miners’ demands by paying higher fees.

With the help of EIP-1559, the current “auction system” for fees will be replaced by a standard rate. Known as “BASEFEE’, it will remain the same for everyone. However, it can increase or decrease depending on the overall network activity. For miners, this means they can no longer dictate the fees, which will undoubtedly annoy some of them.

Will Fees Even Decrease?

Given the current state of the Ethereum network and its high fees, this change is crucial. While it may not solve the scalability issues, it will help keep overall costs down slightly. More importantly, this can make the network more appealing to traders, developers, and corporations alike. No one wants to pay $100 for a transaction because “the miners say so”.  

Whether there will ever be low fees is a different matter altogether. As the BASEFEE can still rise depending on network congestion, it will be interesting to see how high it can go. It is not unthinkable users will pay even more in gas fees than they do today. Until Ethereum 2.0 kicks in fully, these network costs will remain problematic for everyone. 

Will Miners Revolt?

Such a change in miner earnings can prove problematic for many reasons. Miners may see this as a way to cull their power and reduce their earnings. However, no one knows what the new transaction fees will entail exactly. There is no reason for miners to question this upgrade until they have all of the necessary data. 

That being said, several mining pools have uttered their criticism regarding EIP-1559. Some pools even openly oppose the upgrade, which may prove problematic. If more than 50% of the network doesn’t agree with this upgrade, it will not be activated. The coming weeks and months will prove rather interesting in this regard. 

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