EIP-1559 It has emerged as a new feature of the second largest cryptocurrency Ethereum. According to experts, it has the potential to provide a better structure for the future of Ethereum.
However, the arrival of EIP-1559 Many questions have been raised in people’s minds. Here, we will solve this problem. If you are confused when looking at the new features of Ethereum, please continue reading at the end of this article. Here, we will explain everything about it.
Introduction to EIP-1559
EIP-1559, The Ethereum Improvement Proposal, also known as the London Hard Fork Update, is a feature designed to enhance the Ethereum fee system.
In the traditional charging method, called a legacy system, transaction fees used to occur in an auction manner, which is inefficient for many people-keep this in mind, Ethereum founder Vitalik Buterin and EthHub co-founder Eric Conner and some other developers decided to propose EIP-1559 In 2019.
Starting in 2019, the developers of Etehreum will begin testing this feature. After about two years of testing, they finally decided to implement it in the system.Now everything is automated, which greatly improves the user experience-thanks to EIP-1559.
Why is EIP-1559? What is its exact point?
There are many problems with legacy systems. For example, charging users too much.Ethereum developers discovered these problems and brought EIP-1599 As a solution.
Many people believe that Miner’s income will decrease after the implementation of EIP-1599. but it is not the truth. EIP-1559 did not have a huge impact on the income of miners. In fact, it has seen an increase. According to data released by Coin Metrics, the daily income of miners has increased by 7% EIP-1559.
according to Ethereum Gas Station Blog, EIP-1559 It consists of three main functions: basic fee, tip, and fee cap.
The basic fee is basically the amount that the trader needs to fill in in order to carry out the transaction.
If the user submits a higher basic fee and tip, the miner is likely to pass the transaction to the next block.
“What is the basic cost?” You may ask. Well, it depends on the degree of network congestion, because the price of the basic fee varies accordingly.
In the old transaction system, gas fees were once transferred to miners, which increased the supply of Ethereum. However, now, in EIP-1559, the basic cost will not be transferred to miners and burned. The main motivation behind it is to reduce circulating supply, which may lead to higher value of Ethereum.
Experts say that this expectation may not be relevant in the short term, but it can be seen as a reality in the long run.
However, in addition to all these things, the best thing is that now users do not have to participate in any auctions and pay overpriced transaction fees because it is now predetermined.
The tip is the amount that the sender of the transaction should transfer to the miner. Just like compensation for miners, it helps to avoid risks, just like uncle risks. This is a risk, and the possibility that the transaction will be added to the main chain of the block is less because it will slow down the process.
You can also think of tip as a premium that indicates that the miner processes your transactions in a timely manner.
However, when Ethereum is congested, it must return to action-based trading systems or legacy systems. It helps to complete transactions in a faster way.
The fee cap is the term used for the highest fee that the sender of a transaction is willing to pay. This is the final stage of determining the trader’s fees.
The transaction is confirmed, and an amount (the upper limit of the fee is reduced from the basic fee and tip) has been sent to the sender of the transaction, called a refund.
Remember, the basic fee is fixed by the Ethereum blockchain system. On the other hand, the tip and the upper limit of the fee are determined by the user. It is more worthwhile than auction type because it does not cause users to pay unnecessary fees in transactions.
What are the benefits of EIP-1559?
- One of the best benefits EIP-1559 What follows is-an enhanced user experience.
- It will not only improve the user experience; it will also reduce unnecessary fees charged by users.
- As we mentioned before, EIP-1559 A portion of the fees will be burned, which will reduce Ethereum’s inflation. This may be one of the reasons for the higher value of Ethereum.
- EIP-1559 Will make the Ethereum system more secure. This can be considered as a long-term step to deal with denial of service attacks. EIP-1559 Contains features that make attacking the system expensive.
- After implementation EIP-1559, The income of miners has surged.
EIP-1559 With so many great benefits, Vitalik Buterin and other developers fully support it.
EIP 1559 is exactly what the world needs today. https://t.co/7K3AmTF5SO
-vitalik.eth (@VitalikButerin) October 20, 2020
What are the disadvantages of EIP-1559?
Everything has a good side and a bad side; the same applies to EIP-1559. The following are some of the disadvantages of EIP-1559.
- It may bring some unexpected errors to users.
- it It has always been thought to bring security to Ethereum, but this is not always necessary. Code changes may bring potential dangers to the network.
- It may increase the size of a block by nearly 2 times, which will be regarded as a complete block, which means that the gas of a block has reached twice the target.it can Increase basic expenses by 1.125%Therefore, if a series of complete blocks continues, the cost may increase substantially.
Can EIP-1559 be the reason for the growth of Ethereum?
Of course, yes-if we look at it from an expert’s point of view.
See, the main motivation EIP-1559 It is to improve the system, give users a great experience, and reduce the supply of ether. All of these can have a positive impact on the growth of Ethereum.
In particular, the reduction in supply is expected to cause deflation in Ethereum. Connor, the co-founder of EthHub, admitted that a deflationary system may be very beneficial to investors who follow Ethereum.
However, Ethereum is one of the largest Cryptocurrency in the world. It does have a lot of potential, because its developers are willing to invest energy in implementing new technologies and leading it to a better future.
A very fresh example is the tendency of Ethereum to POS (Proof of stock).according to CNBC success, Ethereum has a comprehensive plan to adopt the POS model in 2022 in the next few years. Simply put, Proof of Stake allows their users to become validators in the system by staking their Ethereum.
POS has many benefits, for example, it makes the system more Decentralized And protect the fragments. It is also said that POS may increase the price of Ethereum.
If we see the big picture, investing in cryptocurrencies like Ethereum will benefit. They continue to improve and bring technology to make our lives easier. Many people may understand the potential of Ethereum and fully support it.
Cryptocurrency trading Can get a good return. However, be sure to conduct in-depth research.
Miss’s belief in EIP-1559
- Many people think EIP-1559 It is purely to eliminate unnecessary expenses. In fact, it was introduced to make costs predictable and reduce volatility.
- Some people say EIP-1559 May cause miners to face loss of income. But it was not seen when it arrived. Income increases over time.
- Another myth circulating is about the interaction of EIP-1559 with miner extractable value (MEV). According to the source, there is no possibility of interaction between the two. However, there may be some new features for miners.
EIP-1559 It is a great revolution for Ethereum. Its main purpose is to replace the auction-style charging system, because it brings many problems to users. EIP-1559 was selected as the most effective solution to these problems.
After about 1-2 years of testing, Ethereum developers Decided to introduce it into the system. It has the support of many big names such as Vitalik Buterin and Eric Conner.
EIP-1559 There are many advantages, but also some disadvantages. It makes people hope that it can play a key role in improving Ethereum.
In particular, according to experts, burning basic fees to reduce inflation is one of the most useful things that may increase the price of Ethereum. Eric Conner said that in the long run, this is very beneficial to investors.