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Why is EIP-1559 needed?

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Why EIP-1559 will provide Ethereum with user experience, economic and security benefits.

Original title: "Why is EIP-1559 needed?" "

Original Source: Decentralized Finance Community

Author: TimBeiko of ConsenSys, he is the main responsible for EIP-1559 One of the people

Benefits of EIP-1559

EIP-1559 is a proposed change to the Ethereum fee market. The proposal will provide Ethereum with user experience, economic and security benefits.

User Experience Benefits:Include transactions faster

Transactions on Ethereum often take a long time to wait. Because blocks are always full, each new block is filled with the highest paying transactions since the previous block. If a transaction is not immediately included (which usually requires very high gas fees), it is difficult to estimate when it will be included.

According to EIP-1559, a block can be up to "200% full", which means that if the gas limit is set to 12.5 m, then gas blocks up to 25m will be valid. The block will also include the minimum price required by the exchange, BASE FEE. BASE FEE will increase when the block is >100% full. It will drop when the block is < 100% full.

This means that most of the time, blocks will have 100% "extra" capacity, which they can fill with transactions. Therefore, as long as the transaction fee sent is higher than BASE FEE, and includes the miner's tip, it will be included in the next few blocks.

From transaction sending to transaction inclusion, BASE FEE will increase during this period. To help with this, transactions specify the maximum amount they are willing to pay for inclusion, the FEE CAP. The sender of the transaction will be refunded the difference between FEE CAP and BASE FEE (which has been canceled) and TIP (paid to the miner).

From another point of view, 1559 makes the included price of the transaction explicit in the agreement, rather than implicit as it is now .

For example, if the included "market price" is 100 gwei and the user wants to ensure a quick inclusion, today's motivation is Pay > 100 gwei (this is difficult to estimate as this value is not part of the protocol), and its entire bid will be used to calculate the transaction price. At 1559, if the BASE FEE is 100 gwei, the user can place a FEE CAP of 200 gwei, a tip of 3 gwei, and they only need to pay the BASE FEE and TIP that contain the block. The difference between 200 gwei FEE CAP will be refunded to the sender.

It should be noted that when the block is "200% full". In this case, the fee market will revert to an auction based on the highest tipped transaction, which is our current system. Given the BAES FEE increase (~10-fold every 5 minutes), these periods are expected to be brief. In other words, today's "average case" becomes the "worst case" in 1559.

Better Transaction Fee Estimation

Additional to 1559 One notable UX improvement is that it makes it easier to estimate transaction fees, both for Type 1559 transactions and traditional ones.

As mentioned earlier, estimating the transaction price of the 1559 model is simple: set the above FEE CAP higher than the BAES FEE, Or with the greatest willingness to pay, set TIP to a price sufficient to compensate miners for whom it computes cost and risk blocks. (wallets can default this value and update it over time, so end users don't necessarily need to manually set it).

Interestingly, the 1559 type's simple fee estimation would also allow legacy transactions to have better estimates (still supported). By looking at historical BAES FEE and TIP values, the transaction estimation service will be able to provide better estimates than currently available.

Economic benefits

Transaction fees need to be paid by ETH

Also known as "preventing the economic abstraction of ETH". EIP-1559 requires all transactions to use the BASE FEE of the ETH payment protocol. While this may sound trivial, under the current fee market, there is no guarantee that transaction fees will be paid to miners in ETH, and even the miners themselves do not necessarily use it for their on-chain transactions.

In other words, today, people can trade off-chain (or on-chain other assets like DAI, USDC etc.) pays miners to include their transactions with zero gas fees . This may result in ETH not being the primary currency of the Ethereum network.

In 1559, since BASE FEE will be burned during the transaction execution process and must be paid by ETH, the transaction fee needs to be On-chain payment. Obviously, miners are free to charge fees for other transactions, but they will need to obtain ETH to pay for transactions paid in another way BASE FEE, which is economically equivalent to users paying transaction fees directly with ETH.

Higher block space requirements create deflationary pressure

Given that BASE FEE is burned as part of every transaction, and as Ethereum's demand for block space increases, BASE FEE will also rise, the impact on Ethereum block space Sustained high demand will put deflationary pressure on the supply of ETH. In other words, the more people wanting to use Ethereum, the higher the BASE FEE, and the more Ethereum is burned overall and per transaction.

This is in line with the philosophy of "minimum viable insurance", creating a positive feedback loop between network usage and network value .

Protection Benefits

Reduce risk of near-head reorganization

As block transaction fees increase, miners are increasingly motivated to reorganize near the head Minor chain reorgs to capture high-paying transactions into their own blocks instead of filling the pockets of competing miners.

In 1559, with the vast majority of transaction fees burned, miners had much less incentive to do near-head reshuffles.

Make DoS/Spam attacks exponentially more expensive over time

Today, if an attacker wants to do DoS or spam the network, they can do so at constant cost, possibly at a cost of will be lower than the market cost.

An attacker who wants to DoS or spam the network only needs to pay enough gas fees for miners to include them transactions, and this gas fee is independent of other transactions contained in the chain. If they cooperate with miners, they can pay a below-market price for transactions because miners can include them in the chain with low or zero gas fees.

At 1559, because blocks can grow to 200% full, if an attacker wants to use a lot of block space to spam the network , will cause BASE FEE to increase. This means that the cost of an attack increases over time (i.e. non-attacking miners can continue to include other users' transactions), and an attacker cannot include their transactions in the chain for less than BASE FEE.