Table of Contents

The EIP-1559 Upgrade Is Finally Here!

Share on twitter
Twitter
Share on facebook
Facebook
Share on telegram
Telegram
Share on reddit
Reddit
Share on whatsapp
WhatsApp

The long-awaited EIP-1559 upgrade to the Ethereum (ETH) network is finally here – The Ethereum Improvement Proposal, or EIP-1559 for short, has been the most talked-about upgrade to the Ether network since the launch of ETH 2.0 in December of last year.

According to speculators and rumors in the community, with the long-term effects of the upgrade, it would not be unrealistic to see the price of ETH soar to figures upwards of $20,000 and beyond!

Consequently, investors are bullishly eying up the upcoming gas-saving upgrade.

What Is the Ethereum Improvement Proposal (EIP-1559)?

The Ethereum Improvement Proposal, otherwise known as EIP-1559, will change Ethereum’s market mechanisms to pay for transaction fees. Fundamentally, EIP-1559 gets rid of the first-price auction and replaces it with a fixed-price sale.

EIP-1559 introduces a mechanism to adjust the current auction process that determines transaction prices – creating an effect of dynamically adjusted fees so that users pay the lowest bid for the block.

The significance of this change is that users submitting transactions won’t have to guess as much about how much gas is required, as there will be an explicitly ‘base fee’ included in the next block mined.

The idea is to make fees based on block demand more transparent for the user. Wallets such as MetaMask will have better estimates and will no longer have to rely on external oracles as much.

Will the EIP-1559 Upgrade Reduce Gas Fees?

The surge in prices and a booming decentralized finance (DeFi) sector have put massive demands on Ethereum. As a consequence, gas fees have skyrocketed to record levels in recent months.

EIP-1559 introduces a mechanism to adjust the current auction process that determines transaction prices – creating an effect of dynamically adjusted fees so that users pay the lowest bid for the block.

But will the EIP-1559 upgrade reduce gas fees?

No, not necessarily – this is not the intent of the improvement proposal. However, it may lead to a reduction in gas fees due to the implementation of fee predictability, leading users to overpay far less frequently.

Conclusion

With EIP-1559, the idea is to make gas fees more or less transparent for the user. Therefore, wallets will be able to have better estimates and make transaction fees more predictable. There will be additional user experience benefits like automating the fee bidding mechanism, thus reducing delays in transaction confirmation.

Ultimately, the EIP-1559 proposal is to modify the current Ethereum system so that everyone pays just the lowest bid included in the block. 

Gas fees would dynamically adjust depending on network load and demand, which would allow wallets and protocols to automate the adjustment of lower and more accurate gas fees. EIP-1559 will be live on Ethereum mainnet on August 5th.

Try Swapfolio!

New to Swapfolio?

Consider giving our dApp a try next time you swap for your favorite ERC-20 token, like $UNI or our $SWFL token, which you can stake for daily rewards here!

If you are struggling to manage your Uniswap tokens – as always, we have got you covered.

Try Swapfolio today – for FREE.

Struggling to manage your Uniswap tokens?

We've got you covered. Try Swapfolio today, for FREE

Try Swapfolio today, for FREE

Share on twitter
Twitter
Share on facebook
Facebook
Share on telegram
Telegram
Share on reddit
Reddit
Share on whatsapp
WhatsApp
Share on twitter
Share on facebook
Share on telegram
Share on reddit
Share on whatsapp