Burn Ethereum Fees: EIP1559 Accepted into the London Hard Fork, Coming This July
“Always” burning or destroying the base fee will cement the economic value of ETH within the Ethereum platform and create a positive feedback loop for Ether price.
Ethereum Improvement Proposal (EIP) 1559, a significant and contentious update, is coming to the second largest network.
The proposal has been accepted to be included in the London hard fork, which is expected to come this July regardless of miners’ stance on it, according to the All Core Developers call Friday.
The hard fork will be packed with several other EIPs. Ethereum developers have also decided to include the “Ice Age” – delay to the difficulty bomb that will increase the mining difficulty along with it. According to Geth team lead Péter Szilágyi, the pairing will ensure no one would fork Ethereum without undergoing technical hurdles at the time.
EIP 1559 basically aims to have a fixed-per-block network fee that is burned and dynamically expands/contracts block sizes to deal with the congestion. The base fee amount, which is adjusted based on how congested the network is, the changes will be constrained, will be estimated by most users’ wallets, and a small inclusion fee which compensates miners.
Miners only get to keep the inclusion fee while the base fee is “always” burned or destroyed by the protocol so that only ETH can be ever used to pay for transactions on Ethereum, “cementing the economic value of ETH within the Ethereum platform.”
Given that miners raked in a record nearly $723 million in transaction fees in February, about 52.7% of miners’ total $1.37 billion revenue in the month, they have been gathering in opposition.
A minority pool Flexpool actually launched a campaign against the EIP with several others, including the majority pools like SparkPool and Ethermine also joining in. More than 60% of the network is against this proposal.
One of the biggest miners, F2Pool, which has about 10% hash power, meanwhile has announced its support of the proposal, saying that miners have been already benefiting from the increasing usage and resultant skyrocketing fees on Ethereum despite the rewards dropping from 30k ETH daily in 2016 to 13k ETH daily today. The mining pool also stated that it is important to side with the users and core contributors as history has taught some costly lessons in this regard (cue ETC).
Market expectation is another reason for siding with the proposal as from investors to community members; people have positive feedback for EIP-1559.
As we reported, the world’s largest digital asset manager, Grayscale defined EIP 1559 as a “positive feedback loop for Ether’s price.” And while ETH continues to outperform Bitcoin’s gains, up over 100% YTD to BTC’s 61%, Ether has been rather falling behind.
As of writing, ETH has been trading around $1,500, just 5.6% above 2017 ATH of $1,420 while BTC is currently up 140% from the $20k peak.