Major Ethereum gas fee overhaul EIP-1559 scheduled for July
Users and investors delight as EIP-1559 is scheduled for July, but ETH miners are less than thrilled.
A hotly awaited upgrade to the Ethereum network that may result in ETH becoming a deflationary asset is now scheduled for the “London” hard fork in July.
Ethereum lead developer Tim Beiko previously teased that the decision would be made today two weeks ago, and proposed the inclusion on the Core Developers call today. There were no verbal objections.
“We’re in a spot where the EIP is sound,” said Beiko on the call. “[…] We’re in a spot, I think, where it’s ready to be included in an upgrade.”
The proposal, co-authored by Ethereum cofounder Vitalik Buterin, will transition Ethereum’s fee structure away from a bidding system that allows miners to prioritize the highest bids. The new fee structure will dynamically and programmatically adjust fees so users only pay the lowest bid for each block.
Additionally, the base network fee will now be “burned” on each transaction, potentially leading to deflationary tokeneconomics for ETH.
The Proposal has been widely anticipated by nearly all members of the Ethereum community, including investors, speculators, and regular users of the network. An analysis of network transactions last year found that EIP-1559 would have burned 1 million Ether over the course of 365 days — almost 1% of the network. Earlier this month research from ETF issuer Grayscale concluded that a deflationary mechanic will be a boon for Ether’s price, creating a positive price feedback loop.
Users have also been bellyaching about gas fees for months, and there have been some notable examples of sky-high fees for simple transactions, including a $36,000 Uniswap trade.
One notable group less excited about the proposal is Ethereum miners. There have been threats of a hard fork and alternative proposal put forth, and some estimates pegged the loss in revenue for miners at 50%. Ultimately, however, the proposal is now going forward, putting an end to “selfish” mining practices.