The EIP-1559 is believed to alter the transaction processing process where currently users pay a higher gas fee to get their transaction picked by the miners in the next block. With the new improvement, the user would send the gas fee to the network directly. Then the network would assign a tip to miners. It lowers transaction fee volatility by burning the prices paid in ETH instead of paying miners. The core dev. of Ethereum TIM BEIKO (@TimBeiko) has posted on ethereum.org EIP-1559 will be live on Mainnet this April could be thought of as an “ETH buyback” proposal earlier this year. EIP-1559 could make ETH a deflationary asset.
Miner community is making most profits on Ethereum gas fees. In Feb 2021, we’ve seen record-breaking 52.87% revenue generated just from transaction fees. After the implementation of EIP-1559, it will burn this revenue, and miners will only get the Block rewards.
Ethereum network’s never-ending gas fee problem has made the network quite expensive to use. The scalability issues added with the growing gas fee have made it quite difficult to use, and as a result, many traders and Defi protocols have started to shift over other EVM supporting blockchains. The new fee structure will dynamically and programmatically adjust fees, so users only pay each block’s average bid.
Additionally, the base network fee will now burn on each transaction, potentially leading to deflationary token economics for ETH. The proposal widely anticipates by nearly all Ethereum community members, including investors, speculators, and regular users of the network. The least excited group about the proposal is Ethereum miners, as they will almost lose their 20% to 35% revenue.
Ethereum developer Justin Drake recently shared a post highlighting the impact EIP-1559 could have on ETH. He used the term “ultrasound money” to compare it to BTC’s popular “sound money” narrative.
Minority mining pool Flexpool launched a marketing campaign against the EIP. Several minority pools joined, followed by majority pools Ethermine and SparkPool. Over 60% of the Ethereum network’s hash power is now against the proposal. F2Pool is the largest pool in favor of the EIP, with Approx 10% hash power.
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Mining pools have only a few options to stop EIP 1559. However, the immense danger would be a 51% attack against Ethereum, however, it’ll be very expensive to do so given various financial incentives for not to attack the network.
There may have to be a solution to compensate miners for bringing the base fee; however, it cannot put users in the middle to meet the miners’ demands. However, it would be easier for miners to cooperate with the core development teams and the upgrade users.
