An Ethereum proposal that could effectively change the fee market mechanism by burning a little ETH for every transaction made is under the spotlight.
Ethereum network fees are currently calculated in an auction-like mechanism that works by having everyone submit their bid for how much they’re willing to pay to have their transaction picked up by a miner. Miners will select the highest bids which lead to network congestion and very long waits for everyone else paying the regular amount.
Enter EIP 1559
EIP 1559 is a proposal to adjust this system so that users submit bids as usual, and then everyone pays just the lowest bid that was included in the block. The fees would be dynamically adjusted depending on network load and demand which would allow wallets and protocols to automatically set more accurate gas fees.
The proposal is already in the testing phase following the release of an implementation study a year ago, as previously reported by CryptoPotato, and there have just been a couple of updates posted on the documentation by developer Tim Beiko.
A lot of you asked for this, so here it is: fresh off the press, the first proper EIP-1559 update 🔥
Expect something like this every couple weeks to share the progress we are making on the EIP: https://t.co/k0ByGngdlA
— Tim Beiko | timbeiko.eth (@TimBeiko) September 23, 2020
One issue that has arisen was the risk of EIP-1559 creating more leeway for actors wanting to attack the network through denial of service as blocks could stretch to up to three times their size making an attack more potent.
Early this year, developers at ConsenSys ran some tests on whether the network could handle these larger blocks, and today both Hyperledger Besu and Vulcanize’s Geth have implementations for EIP-1559, the report added.
“As we iron out implementation details, we will be ready to gradually test more complex scenarios, such as proof of work networks, adding more clients and processing large blocks to better understand the impact on the individual nodes and network.”
Further simulations have been run by the Ethereum Foundation’s Robust Incentives Group which have tested it under spike usage conditions. There has been further research into the fee mechanisms and a number of additional proposals such as ‘escalator fees’ under EIP-2593.
Current Ethereum Gas Fee Situation
Following the Uniswap-driven gas fee surge on September 17, network demand has fallen back somewhat but Ethereum transaction fees still remain high. Average transaction fees peaked to over $12 at the time but have since retreated to around $3.80 according to Bitinfocharts.com.
According to Etherscan, Uniswap is the biggest gas guzzler, generating over a quarter of the fees, or over $1.1 million, over the past 24 hours while Tether is second with around 10%, or $460,000.