Ethereum developers have began a review of an algorithmic change to the pricing of network fees that could potentially lead to a reduction in ethereum’s total supply.
The Ethereum Improvement Proposal (EIP) 1559, sets a base fee which is algorithmically calculated based on whether the network is congested or otherwise, with it increasing or decreasing accordingly.
The aim is to reduce costs especially during congestion times so that people don’t have to overpay due to guesswork, but instead can predict the fees due to this algorithmic measurement.
According to Status devs, “this then allows wallets to auto-set the gas fees for users in a highly reliable fashion.”
In an additional change this base fee is then burned, rather than given to miners as currently, unless the user adds an extra fee on top of the base fee.
At times this can lead to huge amounts being burned at about 5,000 eth daily or as much as 42,000 eth as at the peak in September:
As this proposal adds what can be called a soft block limit of 10 million gas units and then a hard limit of 20 million per block, it is expected that the base fee would be sufficient for quick inclusion even during congested periods due to the code’s calculations of all the parameters in setting the fee.
So saving fees for users while holders are rewarded through fees being burned with miners getting their block rewards.
A win-win for all you’d think, but this is a complex proposal which nonetheless has progressed to the point of first review.
Some 12 coders have been looking at it for the past two weeks, with Tim Beiko, the new chair of Core Dev Meetings, stating:
“While the PR isn’t final (the 1559 spec still isn’t either!), it will provide enough context to the Geth team for an initial review.”
The devs are also planning a transaction spamming event of a test network which if it stays up, “will be a good indication that EIP-1559 is robust even under severe network congestion when dealing with a state as large as mainnet’s.”
So this proposal is moving with research and development continuing towards one of the biggest upgrade of ethereum that should increase usability, especially during high congestion, while reducing issuance.