Ethereum users have faced extreme transaction fees over recent weeks and months.
Many have seen high Ethereum transaction fees as something decisively bad for the network.
There is a way that high transaction fees can actually provide a benefit to Ethereum users: Ethereum Improvement Proposal 1559.What is EIP-1559?
EIP-1559 is a technical improvement that suggests that the current transaction model of the blockchain is currently "Inefficient and needlessly costly to users." Ethereum currently uses a two-sided market, where users bid a certain gas price in Gwei to get to the front of the line, similar to Bitcoin.
"The purpose of EIP 1559, according to Eric Conner, is to provide wallets and users a much needed improvement to the user-experience of gas management. The way that EIP 1559 solves the gas-management problem also improves Ethereum's monetary management system."
What EIP-1559 would have accomplished if it had been implemented.
Head of DTC Capital Spencer Noon recently shared an analysis indicating that "If EIP-1559 had been implemented, over the last 365 days, an estimated 970k $ETH would have been burnt."
That's to say, just under one percent of all ETH would have been burnt in the past year if EIP-1559 was implemented.
This would mean that Ethereum's inflation rate over the past year was closer to three percent, nearing that of BTC's.If EIP-1559 had been implemented, over the last 365 days, an estimated 970k $ETH would have been burnt.
Whatever the case, EIP-1559 would cause a strong shift in Ethereum's supply-demand dynamics.
1,000,000 Ethereum would have been burned in the past year if EIP-1559 was live
Published on Oct 16, 2020
by Cryptoslate | Published on Coinage
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