EIP-1559 creator: EIP-1559 cannot solve Ethereum congestion and high fees

Despite the sharp pullback of the past few days, ETH’s value has increased by almost 30% since early April, from $1,800 to a peak of $2,480. Ethereum has risen amid criticism of network congestion and rising transaction costs.

Putting it into perspective, the average cost of transacting on the Ethereum ecosystem has been hovering in the $16-20 range since the second half of February, which is not ideal for individuals looking to facilitate smaller transactions to take advantage of actual. platform. In fact, on Feb. 23, the value of the said fee surged to an all-time high of $42, causing displeasure across the cryptocurrency community.

The Ethereum network has recently undergone a hard fork called "Berlin", which in the most basic sense can be seen as a network upgrade containing four Ethereum improvement proposals that seek to modify the ecosystem's Gas fee requirements, and allow new transaction types.

The adoption rate of EIP-1559 has accounted for nearly 50% of all Ethereum transactions: On August 24th, according to Blocknative data, the adoption of EIP-1559 is growing and has now accounted for nearly 50% of all Ethereum transactions. [2021/8/24 22:34:44]

The Berlin update appears to be laying the groundwork for a larger London hard fork that will activate EIP-1559: a sweeping, albeit controversial, overhaul of ethereum’s existing fee structure.

Despite the grandiose promise of the upcoming London hard fork on the surface, it is still very interesting to delve into whether EIP-1559 will be the long-term solution Ethereum needs to permanently solve its scalability problems.

Cointelegraph spoke with Abdelhamid Bakhta, one of the six lead authors of EIP-1559. As things stand, he points out, there is currently a lot of misinformation and half-baked knowledge floating around the web about the upcoming London upgrade.

Ethereum community members released a solution to improve EIP-1559 unreasonable congestion charging: Jinse Finance reported that Ethereum community member Face-Shaver released a solution to improve EIP-1559 unreasonable congestion charging on the Ethereum technology forum ethresear.ch, the community Members said that EIP-1559 would introduce protocol fees in Ethereum transactions and allow for dynamic block size adjustments based on congestion. Collecting protocol fees during times of on-chain congestion is an effective way to transfer MEV from miners to ETH holders without harming users. At the same time, the flexible block size makes the allocation of block space more efficient. However, under the current charging structure, the wrong people could end up paying for congestion. Generally speaking, when a user congests a block, it is the user of the next block who pays for the congestion. This is undesirable for several reasons. 1. This is unfair; 2. It increases congestion; 3. It exacerbates gas fee auctions.

Community members came up with a solution, suggesting that when a block is congested, users of the same block are charged for the congestion, which can be achieved by charging a fee based on the size a miner uses in his block. [2021/7/24 1:13:36]

First, Bakhta clarified that reducing the current congestion and high fees is not the purpose of EIP-1559, EIP-1559 is intended to try to introduce the concept of "block resilience", which means the theoretical maximum capacity of the platform will double. He further added:

Wu Jihan: If EIP-1559 is successfully passed, the price of ETH will rise sharply: Wu Jihan, the chairman of Bitfawn, expressed his support for the Ethereum EIP-1559 proposal in the BCH bee colony. Regarding the opposition of a large number of mining pools to the EIP-1559 proposal, he said: V God has worked so hard to make such a good proposal, and there are still so many people who oppose it. The proposal passed smoothly, the price of ETH rose sharply, and the miners were also winners. EIP-1559 will destroy most of the fees, promote Ethereum from inflation to deflation, and reduce the income of miners (coin standard) by 10-30%. At present, Xinghuo and other Ethereum mining pools are against it, but F2Pool supports it, believing that it can improve user experience. (Wu said blockchain) [2021/3/2 18:07:50]

However, on a more optimistic note, he did add that as more and more second-layer solutions continue to be adopted, all network fees and congestion issues will eventually be resolved.

Ethereum core developer: EIP-1559 focuses on improving user experience and addressing inefficiencies in the Gas market: Ethereum core developer eric.eth tweeted that EIP-1559 needs a history lesson as it is now a bit modified up. At the beginning of 2019, it was very frustrated that the first price auction model of Ethereum fees was very bad. eric.eth sees this as the first hurdle to mass adoption. This frustration is purely a user experience. This has nothing to do with the idea of a burn fee. After the lack of response and understanding V God's thesis, I understood that was the best option and contacted V God. Then we wrote EIP-1559 together. It's worth noting that burning the base fee is just a technical sidenote in the paper and medium article. Its focus is purely on improving user experience and addressing inefficiencies in the Gas market. However, currently the overall narrative of EIP-1559 has become "it's good because it burns ETH", which is a bit depressing. This is a nice side effect, but it's not why we should implement it. We might burn some ETH, but people are expecting too much. Not all parts of every fee will be destroyed, and once there is scale, fewer fees will be destroyed. According to previous news, EIP-1559 is expected to be launched this year. It is reported that EIP-1559 attempts to reduce transaction costs by introducing fixed fees and destruction mechanisms. EIP-1559, first proposed by Vitalik in 2018, is expected to make the fee market on the Ethereum blockchain more predictable and alleviate congestion. [2021/2/10 19:26:23]

Regarding miners’ dissatisfaction with the proposal to reduce their mining reward rate by 50% following the implementation of the London hard fork, Bachta argued that it’s clear why some miners object to the proposal. “Ethereum mining has become a full-fledged business in itself, with gas fees at their highest level in years,” he added.

However, he did point out that when Ethereum finally transitioned to a PoS framework, miners already knew their operations would be over, adding that while he knew such cuts would be unacceptable, the change was inevitable. Bachta further noted: "It's not that they're unaware of the proposal. The idea was originally proposed by Vitalik in a July 2018 paper titled "First and Second Price Auctions, Improving Transaction Fee Markets." proposed in the article."

Jan Strandberg, co-founder and chief growth officer of DeFi platform Yield App, offered his thoughts on how the upcoming EIP-1559 could help the Ethereum ecosystem, noting that while the upgrade may bring some relief to developers, DeFi traders are concerned. Tired of high gas fees and long wait times, this is a short-term solution to Ethereum's most important problem.

He believes that a real breakthrough will only be witnessed when Eth2 finally goes live, which will allow the network to scale its transaction capacity from 15 transactions per second to 100,000 transactions per second. He went on to add: "This will be a real game changer - not just for Ethereum, or even for DeFi, but probably all cryptocurrencies. It will pave the way for real mainstream adoption. So, it seems that The upcoming London hard fork will only fundamentally change Ethereum's peripheral economics without having a major impact on scalability.

Anton Bukov, co-founder of DEX aggregator 1inch Network, told Cointelegraph that he would be surprised if the upcoming London hard fork goes live before September even. Regarding the scalability issue of Ethereum, he agreed that the focus should be on Layer 2 solutions, rather than EIP-1559 as the final solution.

When it comes to potential gray areas related to EIP-1559, Bakhta believes that, as things stand, the ethereum developer team seems to have covered all potential risks associated with the aforementioned proposals. He elaborated:

"There are two main aspects to consider: economic analysis and performance impact. The purpose of the economic analysis is to determine whether the new market model is secure and not vulnerable to attack. Regarding performance, there is concern about whether the network can handle data blocks twice as large. The answer That's for sure."

On a more technical note, Bakhta highlighted that the team has been able to successfully process blocks that are almost four times the current size of the mainnet, even exceeding the EIP-1559 proposal submitted to the table, adding:

Strandberg thinks Eth2 comes down to it. He added: "When Eth2 arrives, we will really see something special that will be worth the wait." Cryptoeconomic networks like ethereum must constantly balance the security budget needed to keep the system safe and the fees charged by miners. Additionally, EIP-1559 was introduced as a long-awaited upgrade to support Ethereum’s growing user base following the recent surge in gas prices on the Ethereum network.

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