Comprehensive review of the effect of EIP-1559, an indicator will become an important signal

Although there are still some controversies, the most eye-catching hard fork upgrade of Ethereum in recent years was completed on the evening of August 5, 2021, Beijing time. The “London” upgrade was activated at a block height of 12,965,000.

This “London” upgrade has 5 core improvements, namely EIP-1559 (Gas fee market reform), EIP-3198 (BASEFEE opcode), EIP-3529 (reduced Gas refund, invalidated Gas Token, and served in 1559 ), EIP-3541 (rejecting new contracts starting with 0xEF bytecode, serving EOF) and EIP-3554 (difficulty bomb postponed to the first week of December), among which the Ethereum community considers EIP-1559 the most important.

In summary, EIP-1559 optimizes the Ethereum transaction packaging mechanism. Previously, Ethereum miners prioritized packaging high gas fee transactions. EIP-1559 uses block fixed network fees (basic fees) + tips to package transactions, eliminating the possibility of users paying Unnecessarily high gas fees. The basic fee will be destroyed and the miner will not be able to obtain it; the miner’s income is mainly the new block reward + tip. At the same time, there is a dynamic and scalable block size design to cope with instantaneous network congestion.

At present, the upgrade of EIP-1559 has been completed for almost 24 hours. Let’s take a look at the effect of EIP-1559.

Burn more than 4,500 ETH in 24 hours

First look at the basic cost of destruction. According to data from etherchain.org, a total of 4482.4 ETH has been destroyed as of the time of publication, and an average of 1.94 ETH has been destroyed per hour on an hourly basis, with a basic cost of 28.3 Gwei. This means that the amount of Ethereum burned within 24 hours will almost certainly exceed 4,500.

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Uniswap founder Hayden Adams estimates that according to the forecast of ETH burned by Uniswap in the two hours of online EIP-1559 (approximately 80 ETH), Uniswap alone can consume 350,000 ETH each year, and the current market value is close to 1 billion US dollars.

In EIP-1559, the basic fee is calculated based on the basic fee of the previous block and the block utilization rate, that is, when the utilization rate is higher than 50%, the basic fee increases; when the utilization rate is lower than 50%, the basic fee decreases; When the block gas utilization rate is 50%, the basic fee will remain unchanged; the basic fee of each block will not change more than 1/8.

The picture below shows the basic fee changes:

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Miners’ tip income is much lower than the burned ETH

EIP-1559 uses the block fixed network fee (basic fee) + tip to package the transaction, and the basic fee is destroyed, so that the miner’s income comes from the block reward + tip. So what is the tip income after EIP-1559?

According to oklink data, the tip income of each block is currently less than 0.1 ETH, which is far lower than the number of Ethereum destroyed. No wonder the miners fiercely opposed EIP-1559.

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Burn ETH rankings: will become an important indicator

ultrasound.money counts the list of projects with the most ETH destroyed, as shown in the figure below:

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Except for CovidPunks, several other projects are all star projects in the cryptocurrency industry and are also the most commonly used projects by users. They are the leading projects of NFT, DEX, wallet, and stable currency track.

CovidPunks is a copy of CryptoPunk’s disk project. Its destruction fee is the largest, reaching 527.5 ETH, accounting for nearly 12% of the total network destruction fee.

Destroying the ETH rankings in the future may be an important indicator that can tell us which projects are rapidly becoming popular and rising .

Gas fees have not dropped significantly

Although EIP-1559 does not promise to reduce gas fees, people still hope to improve the user experience of Ethereum in terms of gas fees. After the upgrade in London was completed, the price of Gas rose to more than 100 Gwei.

Trenton Van Epps, the coordinator of the Ethereum Foundation’s ecological construction, tweeted an explanation or a total of five major reasons, specifically: 1. There are some large-scale NFT airdrops in progress, which has caused network congestion; 2. Many service providers (such as The exchange) disabled some functions (recharge and withdrawal) during the network upgrade. Once the upgrade is completed, the pent-up demand will be released intensively; 3. Some miners set the Gas Limit below 30 million, making each zone The block only used about 13.5 million Gas, which intensified congestion; 4. The ETH secondary market fluctuated and rose; 5. Users were sending a large number of transactions to try the EIP-1559 function.

The current Ethereum Gas fee is around 30 Gwei.

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/comprehensive-review-of-the-effect-of-eip-1559-an-indicator-will-become-an-important-signal/
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