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Tech & Science EIP 1559: Biggest Ethereum update in recent years is supposed to make blockchain faster and cheaper

19:51  07 march  2021
19:51  07 march  2021 Source:   t3n.de

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The Ethereum developers have decided on the improvement proposal EIP 1559, which has been discussed for over a year, against the will of the majority of the mining community. It is to be integrated in July.

Update stellt Ethereums Gas Fees auf den Kopf. © AlekseyIvanov / Shutterstock update turns Ethereum's gas fees on its head.

The implementation of the Ethereum Improvement Proposal (EIP) 1559 is considered the largest and most influential update of the blockchain in recent years. It aims to make the Ethereum network cheaper and faster by restructuring the transaction fees. The regulation was decided in the course of of the All-Core-Developers-Call on March 5, 2021 and is to flow into the London-Update .

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Uniform fee instead of auction principle

In future, instead of the transaction fees set independently by miners, the so-called gas fees, there should be an algorithmically determined base fee, i.e. a base fee that does not have to be auctioned again for each transaction. We explained the principle of gas fees to in this article .

The calculated base fee should take into account the degree of utilization of the network and increase or decrease gradually. The block size in the network should also be changed dynamically in order to counteract blockages.

The base fee determined in this way is burned in the course of the transaction, i.e. destroyed by the protocol. Nobody benefits from these payments, which will always remain set to Ether due to the new regulation.

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miners receive "tips"

So it is understandable that large parts of the miner community could not get used to the proposal because it would lose a very important financial incentive. The EIP 1559 still includes an incentive system, the so-called tip or "inclusion fee". In the future,

users will be able to offer an excess payment, the tip, in addition to the base fee, in order to prioritize processing on the chain. Miners only receive these tips.

With that you should by far not achieve your previous sales. In February alone, transaction fees alone were around 723 million US dollars.

Nevertheless, there are also miners who are positive about the proposal. They see the current problems of the Ethereum network quite soberly and acknowledge that they must contribute to the solution in order to keep the network future-proof.

users and developers are fully behind the proposal

On the side of the users and the Ethereum application developers, i.e. the side that has to pay the transaction fees, EIP 1559 enjoys the greatest support. The world's largest crypto administrator Grayscale Investments sees the proposal as an essential further development of the Ethereum network. Mainly because of the concept of burning the transaction fees and the associated shortage of the ether inventory, Grayscale predicts a strong upward trend for the ether price.

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mining is gradually being made more difficult

Regardless of the resistance of the miners and mining pools, EIP 1559 was ultimately binding. Apparently, the core developers fear countermeasures by the opposing miners, which is why they have also included EIP 3238 in the upcoming update for inclusion.

This is the technical implementation of a "Difficulty Bomb". This should gradually make mining on Ethereum more difficult. With the combination of the two proposals, the core developers want to ensure that forking Ethereum is at least only possible if technical obstacles are overcome.

MEV can partially compensate miners for lost sales.

Miners will probably get used to the new regulation in the end. A replacement for lost transactions is already available anyway. With the so-called "Miner Extracted Value" (MEV), miners can use their influence in the compilation of blocks in order to place more profitable trades further up in the processing sequence.

MEV is already enjoying some popularity in the Defi area . Defi traders offer high fees to secure their place in the block. Ethereum mining pools will probably increasingly use MEV software in the future to develop this unused source of income.

By the way: The basic idea of ​​the EIP 1559 goes back to Vitalik Buterin, co-founder and inventor of Ethereum. In August 2018, he formulated a proposal (PDF) that relates to the fairer calculation of transaction fees on the blockchain that is more in line with the actual effort.

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