The controversial Ethereum Improvement Proposal (EIP) 1559 depleted 970,000 Ether (ETH) – a total of $ 360 million – last year, if implemented. EIP-1559 aims to reduce transaction fees by offering flat fees along with a burn-in mechanism,
The findings, based on data from Dune Analytics and published by DTC Capital CEO Spencer Noon, have raised questions from some in the wider Ethereum community about why this proposal has not yet been implemented. Twitter user “Laur Science” suggested implementing it in the following hard fork, adding:
“We hope we won’t discuss this for another two years while miners get a lot of ETH and dump it for dollars, keeping the ETH dollar price in check.
The cumulative amount of ETH burned using EIP-1559. Source: Dune Analytics.
Although the idea of a tax burn was considered for a long time, even before the Ethereum block was created in 2015, EIP-1559 was the first major proposal to incorporate this concept into Ethereum code.
The current proposal, first proposed by Vitalik Buterin in 2018, would fundamentally change the way transaction fees are calculated. EIP-1559 proposes that all transactions carry a standard fixed fee called ‘base fee’. The fee is burned and the incentive for the miners comes from users who add a tip to the top of the base fee.
The proposal allows you to change the basic drawing so that the block size remains about 10 meters of gas. Finally, the proposal contains four design goals – predictable fees, fixed block size, increased security, and financial abstraction (fees are paid in other tokens).
Since EIP-1559 will have a major impact on how miners earn income, it has encountered resistance from the mining community, which has recently seen record revenues. A week ago, Messari stated that Ethereum’s fee exceeded Bitcoin’s fee in two record months.
On the same day, ConsenSys developer Tim Beiko posted results of a survey of 25 Ethereum-based teams about the proposal. Of those surveyed, 60% said yes, but eight out of nine mining companies surveyed said they would turn down the offer if it was difficult.
Earlier this year, Metamask lead developer Dan Finlay raised concerns about holding miners responsible for setting “base fee” standards. Finally, Finlay suggested that the net bid effect would be “the pinnacle of some sort of one-price-per-block auction that reproduces all the problems in the current market, but with the added complexity of it.”
Nick Johnson, developer of the Ethereum name service, raised concerns about the proposal due to “the lack of any formal analysis showing that 1559 is behaving as intended.”
In July, Vitalik Buterin responded to the ever-increasing gas taxes and called EIP-1559 as the final solution.
Within a month after Buterin’s tweet, total Ethereum Bitcoin (BTC) transaction fees had passed before rising to an all-time high.
This isn’t the first time that EIPs have divided the Ethereum community due to misguided goals. Last month, EIP-2878, which wanted to reduce its block reward by 75%, was severely criticized by the mining community.