◆ What is EIP-1559?
In order to form a block on Ethereum, you have to pay gas fees. The transaction can be processed quickly only when a high gas cost is presented and a successful bid is made. Ethereum gas cost continues to rise rapidly. The continued rise in gas prices is particularly problematic when the network has a lot of transactions to handle.
When DeFi (decentralized finance) was in full swing, expensive gas fees were at the heart of the problems faced by Ethereum users. As they offered higher and higher gas costs to deal with each other quickly, the process became rather slow. It took several hours to close a deal.
The Ethereum network system is expensive. The more users pay each other for gas, the more likely the transaction will be processed. In addition to the block fee, miners collect transaction fees.
EIP-1559 is a proposal made to solve this Ethereum network problem. At a given time, a fixed fee is set according to the network transaction volume and the level of congestion. This improves the user experience because in theory users don’t have to pay higher fees to process the transaction.
At the Ethereum developer conference held on the 5th, it was decided to implement EIP-1559 at the hard fork in London.
◆ EIP-1559 is an obstacle to the Ethereum bull market?
▲ Ethereum miners’ holdings (photo source = Coin Matrix)
AMB Crypto cited CoinMatrix data, saying that Ethereum is a bull market and that the amount of Ethereum that miners control is more than ever. In the data, Ethereum miners were classified as 0-hops (mining pool) and 1-hop (hop miners). 0-Hobbs addresses are associated with large mining sites, and 1-hop addresses are miners paid for by 0-Hobbs.
The amount of Ethereum sent by 0-Hops as 1-Hop surged from 2020 to 2021. Ethereum withdrawn from the 0-Hobbs address is highly volatile due to mining block rewards. Mining rewards are unpredictable because of the high volatility of fees. EIP-1559 tries to solve this.
After the increase in Ethereum price, the amount of Ethereum outflows and inflows between miners increased significantly. AMB Crypto said that EIP-1559 keeps gas costs constant, but it could hurt the profitability earned by miners by reducing mining fees.
The media said, “In the long run, the logic of EIP-1559 is valid, but since Ethereum is a bull market, changing the current system will cause many side effects in the short-term profit, etc.Uncertainty will become apparent after July (the London hard fork with EIP-1559 implemented)“It was expected.
◆ Miners opposing EIP-1559, plan to protest on April 1
Cointelegraph reported, “After the introduction of EIP-1559 in July, there is a forecast that Ethereum miners will lose up to 50%, and miners who oppose the introduction of EIP-1559 are planning a demonstration.”
Miners opposing the introduction of EIP-1559 plan to send hash power to Ethermine mining sites that do not introduce the proposal for 51 hours from April 1st. Some are hoping to have mining power that can change the protocol by accounting for more than 51% of the total hash power at this time. A popular YouTuber who opposes the introduction of EIP-1559 claimed through a live streaming broadcast on the 9th that “this is not a network attack, but a sign of strength.”