The official transcript of the call can be found here.

This is the video recording of the 3rd call:

Conclusion

In summary, BASEFEE allows the protocol to enforce a minimum fee without incentivising the formation of an off-chain market. It serves as a foundation for more flexible blockspace utilisation mechanisms, such as; uniform price auctions and elastic block sizes.

The proposed fee market change has been pretty widely debated, but I think it sounds like a good idea. What do you think?

A community fund was setup for this EIP on Gitcoin in the last few weeks, and it has already raised over $50,000 (including matching). These funds will go a long way to making sure this EIP gets the love it deserves so that it can be safely included in the Ethereum protocol.


ETH’s economic value is enshrined at the protocol level.

EIP-1559 is one of the most highly anticipated upgrades for the Ethereum network and has been debated & argued about for a few months. Essentially, the proposal to change the Ethereum fee market is based around these 2 key changes:

  • The current gas limit of 10 million is replaced by two values: a “long-term average target” (10 million), and a “hard per-block cap” (20 million)
  • There is a BASEFEE (which is burned) which transactions are required to pay, which gets adjusted on a block-by-block basis with the goal of targeting a value so that average block gas usage remains around 10 million.

Currently, miners select transactions ranked by the highest fees which results in many users grossly overpaying.

Besides introducing a key protocol change to pay ETH stakers rather than miners, Ethereum is also expected to become 99.95% more energy efficient, something that should be welcomed by the crypto community and mainstream alike.

Crucially, once the merge takes place, it will drastically reduce ETH emissions. The ETH supply currently inflates by about 4.5% annually to pay miners, but with Proof-of-Stake, the annual emission is expected to be closer to 1%. As EIP-1559 routinely burns 6 ETH per minute, it’s estimated that the rate of ETH burned could surpass the amount issued in block rewards to validators.

Eip1559 has already millionagents

If you’re an Alchemy user, this upgrade will happen for you automatically, and you’ll be able to start using EIP-1559 by changing one or two lines of code. (if you’re not using Alchemy, make sure you prepare for the fork regardless of EIP-1559, or you may experience outages!)

Fortunately, the upgrade to EIP-1559 will be 100% backwards compatible, so August 4th is not a hard deadline for adapting to the new system. All legacy transactions will continue to work as they do now, they just won’t take advantage of any of the changes the EIP introduces.

That said, updating applications to make the most of EIP-1559 is super straightforward, so we’d encourage anyone with the bandwidth to make a couple quick updates to do so.

Eip1559 has already millionaire

The second key problem with the current model for choosing gas price is that blind auctions are widely known to be inefficient, and frequently lead to users overpaying. There are plenty of more in depth resources on this for the curious, but consider this simple example:

  1. User A submits a transaction with a 1000 gwei gas price
  2. All other users submit transactions with 10 gwei gas prices
  3. A miner selects User A’s transaction, and fills the rest of the block with 10 gwei transactions

In this case, User A paid 1000 gwei as a gas price, despite the fact that 11 gwei (or even 10.00001 gwei) would have been plenty to guarantee their transaction was mined. Purely because of the auction mechanics at play gas price, User A overpaid by a staggering 989 gwei per gas.

Eip1559 has already millioner

Perhaps a bear market is needed to remind them, or perhaps we must build elsewhere, but this is what it is–nothing new under the sun.”

Ethereum’s sky-high gas fees have pushed users towards rival blockchains, or so-called “Ethereum killers.” For instance, Binance Smart Chain (BSC), which can process over 3.5 million transactions in a 24-hour period, outperformed Ethereum’s transaction volume by nearly 600% in May.

Similarly, Solana, which was launched in 2020, supports tens of thousands of transactions per second with a trivial fee of less than one cent. The project has burst in popularity lately, exceeding Ethereum by 500% in August.

Meanwhile, Ethereum co-founder Vitalik Buterin has recently proposed EIP-4488, a “short-term” solution for Ethereum’s highgas fee issue. However, it usually takes a considerable amount of time for an EIP to be approved and implemented.

That being said, there is one notable effect 1559 will not have: lower overall gas fees.

The high fees that Ethereum users have become so familiar with are a function of the limited capacity of the Ethereum network itself, and the overwhelming demand for submitting transactions. Unfortunately nothing about EIP-1559 will change these factors – but it was never intended to! That is where layer 2s and ETH 2.0 come into the picture.

So, if lower overall fees are what you’re looking for, definitely check out Alchemy’s recently released support for the most popular layer 2 networks: Arbitrum, Optimism, and Polygon (with more to come!).

In the meantime though, EIP-1559 will help make fees quite a bit more predictable and life quite a bit better for Ethereum developers and end users alike.

To tackle this issue, EIP-1559 was introduced. The update was intended to address Ethereum’s unpredictable transaction pricing mechanism by introducing a hybrid approach where the network calculates a base fee in accordance with the current congestion and also enables users to pay a priority fee (tip) to miners for getting their transactions processed faster.

However, to make the network even more efficient, EIP-1559 introduced two more parameters: max fee and max priority fee. Max priority fee is the maximum amount that a user is willing to pay the miner as a tip. Similarly, the max fee is the maximum ETH a user is willing to pay for the transaction as a fee.

The max fee parameter has been quite beneficial for users, enabling them to preserve a margin of safety without having to worry about overpaying.

The call’s agenda included:

  • Status updates from implementers
  • Various 1559-related concerns (see this comment)
  • EIP-2593 overview

The call details / official agenda can be found here, on Github.. The official transcript of the call can be found here.

Implementers’ Call #2

The second call took place on Thursday, 28th May. The second call’s agenda included:

  • Status updates from implementers
  • Removing block size and transaction size riders from EIP 1559
  • 1559 vs.

    Escalator Fees mock ups

  • Consortium network impacts (see this)

The call details / official agenda can be found here, on Github.

This high gas fee has disappointed some crypto enthusiasts who previously viewed Ethereum as a gateway to Web 3.

For one, Zhu Su, CEO at Three Arrows Capital (3ac), has recently taken to Twitter to show his frustration. He says Ethereum has abandoned its users:

Yes I have abandoned Ethereum despite supporting it in the past.

Yes Ethereum has abandoned its users despite supporting them in the past.

The idea of sitting around jerking off watching the burn and concocting purity tests, while zero newcomers can afford the chain, is gross.

— Zhu Su 🔺 (@zhusu) November 21, 2021

Su later added:

“Ethereum culture suffers massively from the Founders Dilemma. Everyone is already far too rich to remember what they originally set out to do.

Essentially, the proposal to change the Ethereum fee market is based around these 2 key changes:

  • The current gas limit of 10 million is replaced by two values: a “long-term average target” (10 million), and a “hard per-block cap” (20 million)
  • There is a BASEFEE (which is burned) which transactions are required to pay, which gets adjusted on a block-by-block basis with the goal of targeting a value so that average block gas usage remains around 10 million.

Currently, miners select transactions ranked by the highest fees which results in many users grossly overpaying.

The update, popularly referred to as “the merge,” will see the blockchain’s consensus layer (otherwise known as the Beacon Chain) merge with the execution layer (Ethereum mainnet).

Anticipation for the merge has been building this week as Ethereum successfully completed a rehearsal of the event on the Kiln testnet (though the Ethereum Foundation’s Tim Beiko reported that one clientfailed to produce blocksduring the runthrough). However, fans of the top smart contract network had been counting down to the merge prior to this week; the move to Proof-of-Stake is expected to be one of the biggest events in the blockchain’s history. Besides introducing a key protocol change to pay ETH stakers rather than miners, Ethereum is also expected to become 99.95% more energy efficient, something that should be welcomed by the crypto community and mainstream alike.

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