- Demand to transact on the Ethereum blockchain has pushed fees to uncomfortable levels.
- A new technical proposal helps address high fees by implementing a dynamic pricing system.
- Called EIP 1559, Ethereum users would now pay a set “base fee” to the network plus a tip to miners.
- One technical observer calls it “the biggest change to any blockchain post-release.”
The cost to use Ethereum has increased some 500% since April. That’s not very helpful for people running programs on it.
And while average gas fees are not at the all-time highs seen in July 2018, the problem will need fixing if decentralized applications (dapps) can be run reliably on the world’s leading smart-contract blockchain.
A potential technical savior is on the horizon, however – and it’s not the Eth 2.0 overhaul or Rollups, the latest en-vogue scaling solution.
Called Ethereum Improvement Proposal (EIP) 1559, this proposed update aims to reduce transaction costs by overhauling the network’s fee market in what independent analyst Hasu describes as “the biggest change to any blockchain post-release.”
Some Ethereum clients, the teams that maintain the blockchain’s software in various programming languages, are already working on implementations.
First introduced in April 2019, EIP 1559 has roots going back to an August 2018 paper on Ethereum’s price-auction model penned by Ethereum co-founder Vitalik Buterin. The EIP itself was co-authored by Buterin, in addition to Ethereum developers Eric Conner, Rick Dudley, Matthew Slipper and Ian Norden.
EIP 1559 tries to solve fee pressure by implementing “algorithmic price discovery,” according to Ethereum Foundation researcher Barnabé Monnot in a technical deep dive.
The EIP solves two problems at once by dynamically changing the size of blocks depending on the number of transactions in the queue between certain thresholds and by pricing out…