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The controversial Ethereum Improvement Proposal (EIP) 1559 would have burned 970,000 Ether (ETH) – worth a total of $ 360 million – in the past year, had it been implemented. EIP-1559 seeks to reduce transaction fees by introducing flat rate fees along with a burn mechanism,
The results, based on data from Dune Analytics e published by DTC Capital chief Spencer Noon, they raised questions among some in the broader Ethereum community as to why the proposal hasn’t already been implemented. Twitter user “Laur Science‘suggested that it should be implemented in the next hard fork, adding:
“Hopefully we won’t continue to discuss this for another two years as miners get too much $ ETH and dump it for $ USD, keeping the price of $ ETH in check.”
Although the idea of burning fees has long been considered, even before the Ethereum genesis block in 2015, EIP-1559 was the first serious proposal to suggest integrating the concept into the Ethereum code.
The current proposal, first suggested in 2018 by Vitalik Buterin, would drastically change the way transaction fees are calculated. EIP-1559 proposes that all transactions have a standard flat rate called “base rate”. This commission is burned and the incentive for miners comes from users adding a “tip” in addition to the base rate.
The proposal allows the basic tariff to be varied to keep the block size at around 10 m of gas. Ultimately, the proposal has four design goals: predictable fees, consistent block sizes, increased security, and the prevention of economic abstraction (fees are paid in other tokens).
As EIP-1559 will have a significant impact on how miners earn revenue, it has triggered a pushback from the mining community which recently enjoyed record revenue. A week ago Messari declared that Ethereum’s fees exceeded Bitcoin’s fees for a record two months.
That same day ConsenSys developer Tim Beiko released the results of a survey of 25 Ethereum-based teams on the proposal. Of the respondents, 60% responded in favor, however, eight of the nine mining companies questioned said they would reject the proposal if implemented as a hard fork.
Earlier this year, Metamask chief developer Dan Finlay voiced concern behind the miners’ responsibility to set the “basefee” parameters. Finally, Finlay suggested that the net effect of the proposal would be to make “the tip a sort of single price auction within each block that reproduces all the problems of the current market but with the added complexity of this”.
Nick Johnson, developer of Ethereum Name Service, declared his apprehension of the proposal due to “the lack of formal analysis showing that 1559 behaves as expected”.
In July, in response to ever-increasing gas tariffs, Vitalik Buterin again called on EIP-1559 as a permanent solution.
Transaction fee revenue is now approaching half of block reward revenue. This actually risks making ethereum * less * secure due to https://t.co/Dase8SL30z. The commissions market reform (eg EIP 1559) solves this problem; another reason why that IEP is important. pic.twitter.com/eqU3tAMh67
– vitalik.eth (@VitalikButerin) 21 July 2020
Within a month of Buterin’s Tweet, total transaction fees for Ethereum surpassed that of Bitcoin (BTC) before taking a steep rise to all-time highs.
This isn’t the first time, PIEs have divided the Ethereum community due to misaligned goals. Last month, EIP-2878, which would reduce block premiums by 75%, was also heavily criticized by the mining community.
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