How EIP-1559 changes the transaction fees of Ethereum
Today, EIP-1559 is being rolled out as part of Ethereum’s latest hard fork in an attempt to make transaction fees more predictable.
Up to now, transaction fees have shown a large volatility (even higher than the Ether token itself) as they were solely based on bids of the transaction senders. Whenever Ethereum was under a high transaction load (like during recent NFT launches) or in heavy market crashes like on May 12, 2020, the fees would spike uncontrollably.
With EIP-1559, Ethereum is moving from a purely bidding-based system to a hybrid approach where the network determines a base fee given the current network load, while allowing users to pay a tip to the miners for faster transaction processing. While simple at first sight, the new method has its intricacies that are worth exploring in more detail.
In this post, I’ll try to shed some light on how users’ parameter choices impact the actual costs of the transaction and its chances of getting mined (quickly).
