Ethereum Gas Fees Made Easy with EIP-1559
An upgrade to Ethereum gas fees?
The Ethereum gas fees you’re familiar with may be changing thanks to EIP-1559. This proposal seeks to do away with the old and sometimes frustrating gas fee auction system. As an alternative, EIP-1559 proposes a BASEFEE, which would make the experience of paying for transaction fees so much smoother.
EIP-1559 simplifies how you pay for Ethereum gas fees
We can all agree that the current auction-style fee system can be frustrating. Ever wanted to just send a transaction without worrying about how busy the network is? You’ll be happy to hear that EIP-1559 automates the auction process by creating a BASEFEE that automatically adjusts in a predictable way based on network congestion.
When the network is at >50% capacity, the BASEFEE goes up. And when capacity is at <50%, the BASEFEE goes down slightly. You can predict the maximum amount the BASEFEE could change from block to block. Therefore, your wallet can be set to pay the BASEFEE along with a tip for the miner (you can choose the tip amount).
Say goodbye to “Insufficient funds for gas” messages
I think we’ve all encountered this phrase. You probably hate seeing that message as much as I do. But with EIP-1559’s simple BASEFEE, you can forget all about it. We reached out to Eric Conner, founder of EthHub and co-author of EIP-1559, for his thoughts on the matter. He shared his thoughts on the impact of EIP-1559:
“The biggest impact for a day to day user is twofold. First, the cost for a transaction to get into the next block will be very predictable. This means that wallets will be able to guide users much easier to the cost they need to pay to get into the next block. Today, there is only very basic retroactive guidance so the user really has no indication of what it will take to get in the next block. Having to manually set gas fees will be a thing of the past for most users.
This brings in the second part which is major cost savings. Because of the current fee auction model and not being able to predict the cost to get into the next block, users often grossly overpay for what the actual cost of getting into that block were. This is normally on the upper-end of 80-90%.”
With a BASEFEE, you won’t ever have to choose between gambling on the wait time that comes with low fees vs paying a mark-up. In fact, you’ll probably get more value for your ether.
EIP-1559 improves the utility and value of your ether
You don’t have to take it from us. When you pay gas fees under EIP-1559, you burn a small amount of ETH, removing it from the ecosystem. As Eric explains:
“When I first read Vitalik’s paper, I was mainly into the idea for the UX and cost saving as previously mentioned. However, as I got deeper into it I realized how important the burning mechanism is.
This fully cements ether at the base layer of the protocol and will kill any attempts at economic abstraction. In a simple sense, economic abstraction would be the ability for user to pay gas fees in something other than ETH which is poor for the value of ETH.
By putting the burn mechanism in, we are cementing that [economic abstraction] will never happen. And of course on top of that we are shrinking supply every block which is great for ETH holders.”
As you can see, EIP-1559 locks in the utility and value of your ether on a protocol level. You might be noticing a trend when it comes to locking ETH into value sinks. For example, you now pay a yearly fee to register an ENS domain. You can count on this trend continuing as Ethereum moves closer to Proof of Stake.
When can we expect to see EIP-1559 implemented?
Eric is pushing for its inclusion in the Istanbul update hard fork slated for later this year. As things stand, Friday, May 17, is the deadline for Istanbul EIP approval, so we could learn soon whether to expect this improvement to Ethereum gas fees in 2019. Eric again:
“I’d say this was my natural aggressiveness 🙂 . Vitalik had written the paper and opened up an issue for discussion on Github, but the idea had never been turned into an EIP. I co-authored the EIP with him. I did my best to translate it into a Medium post. And then, I started the thread for discussion on ETH-Magicians. Perhaps the goal is ambitious, we will see, but no matter what we’re seeing a lot of great work being done on it and I have confidence it’ll make it in sometime soon.”
Thank you to Eric for taking the time to answer our questions! You can always find him at @econoar.
