{"id":2498,"date":"2022-03-24T16:07:04","date_gmt":"2022-03-24T16:07:04","guid":{"rendered":"https:\/\/www.xdefi.io\/?p=2498"},"modified":"2022-11-15T09:22:35","modified_gmt":"2022-11-15T09:22:35","slug":"eip-1559-introduction","status":"publish","type":"post","link":"https:\/\/www.xdefi.io\/es\/eip-1559-introduction\/","title":{"rendered":"What is EIP-1559 and how does it work?"},"content":{"rendered":"

EIP-1559 has been one of the most awaited Ethereum<\/a> upgrades of all time. In this article, we explain in detail what changes have been implemented and how those changed both the user experience and economic model of Ethereum.<\/span><\/p>\n

This article has been written for XDEFI Wallet by Korpi<\/a>.\u00a0<\/em><\/p>\n

For a few months, EIP-1559<\/a> has been on everyone\u2019s lips but, as with all the big changes, there have been both supporters and critics. XDEFI Team<\/a> considers EIP-1559 as a prerequisite to dramatically improve user experience on Ethereum<\/a>. This improvement is not a given though. It is heavily dependent on the way EIP-1559 is integrated into dApps<\/a> and wallets users<\/a> interact with. This is why the XDEFI Team has been focused on building a wallet that empowers its users by giving them comprehensive solutions leveraging benefits of EIP-1559 and much more.\u00a0<\/span><\/p>\n

This blog post aims to clarify why EIP-1559 was introduced, what changes it implemented and how it impacts both user experience and the economic model of Ethereum. <\/b>In a follow-up article, we will share how XDEFI Wallet<\/a> can bring the user experience of EIP-1559 to the next level.<\/span><\/p>\n

EIP-1559 – the most hyped Ethereum upgrade<\/span><\/h2>\n

It rarely happens that EIPs (Ethereum Improvement Proposals) reach mainstream level attention. These upgrades to the Ethereum network are usually only understood by Ethereum developers and, even when they are important, users rarely notice the difference after their implementation. EIP-1559 has been very different, however.<\/span><\/p>\n

\"Try<\/a><\/p>\n

Mainstream media like <\/span>CNBC<\/span><\/a> covered EIP-1559 and the phrase was also trending on Twitter<\/a> for a while. The main reason for this incredible hype was introduction of fee burning (meaning part of the transaction fee<\/a> paid by Ethereum users is now burned) which led to expectations of deflationary ETH<\/a> supply. But <\/span>EIP-1559 is not only about burning ETH. It\u2019s so much more.<\/b><\/p>\n

Legacy gas price auction model made users overpay for transactions<\/span><\/h2>\n

To fully appreciate changes introduced by EIP-1559, one must understand the legacy gas price auction model and its flaws. Before the upgrade, Ethereum users essentially participated<\/a> in an open auction every block where they placed a bid on how much ETH (in <\/span>GWEI <\/span><\/a>= 0.000000001 ETH) they were willing to pay for each unit of <\/span>gas<\/span><\/a>. Because <\/span>blockspace<\/span><\/a> is limited, miners usually prioritized transactions with the highest gas prices. The biggest issue with this model was that gas prices could fluctuate severely from block to block. <\/span>Users didn\u2019t know what gas price would guarantee inclusion in the block. Therefore, they had to stab in the dark when submitting a transaction and often ended up paying more than necessary.<\/b>\u00a0<\/span><\/p>\n

Consider the below example:<\/span><\/p>\n

John has just spotted a great opportunity on the Ethereum blockchain and wants his transaction to be executed as soon as possible (he wants to ape). He checks current gas prices to see that a rapid transaction requires 50 GWEI. He expects gas prices to rise as more users may want to seize the same opportunity, therefore, he uses 100 GWEI when submitting his transaction. The transaction is included in the first block and John pays 100 GWEI for each unit of gas it consumed. However, it turns out that such a high gas price wasn\u2019t necessary. Even with 50 GWEI the transaction would be included in the first block – the gas spike John anticipated didn\u2019t happen. As a result, John overpaid 50 GWEI for each unit of gas.<\/span><\/em><\/p>\n

In legacy transactions, users<\/b> had to gamble with gas prices because they were highly unpredictable. Moreover, they <\/span>were always forced to pay exactly how much they agreed to pay when submitting their transaction, regardless of a fair price that would guarantee inclusion in the same block.<\/b> Consequently, users often overpaid for transactions.<\/span><\/p>\n

EIP-1559 changes how gas prices are estimated and how the network handles sudden increases in usage. And it burns ETH!<\/span><\/h2>\n

To address the issues of gas prices volatility and frequent overpayments in the legacy model, EIP-1559 introduced the following changes to the Ethereum network:<\/span><\/p>\n