New brave world after EIP-1559

In the upcoming London hard-fork, scheduled to happen in July, one significant change London is bringing is the inclusion of the famous EIP-1559. The gas killer, the prodigy, the all-awaited change in the gas fee marketplace.

In summary, EIP-1559 changes how gas fees work in Ethereum. From the current system where the highest gas price transaction is included first to a more streamlined, hybrid method of base fees and tips to the miners. In the current system, the users who want to have their transaction picked up by a miner have to bid for their space in a block essentially. This role after EIP-1559 will take inclusion fee (tip), which goes to the miners, and the base fee will always be burned. This will evenly incentivize miners in periods of high or low network congestion.

Another addition will be dynamic block sizes. It will increase or decrease depending on the state of the network congestion. The maximum gas limit per block will now be 25 million, which is 2x the current gas limit per block of 12.5 million. However, the target gas limit per block will be kept at 12.5 million. Still, in the state of congestion, bigger blocks will be used to accumulate more transactions.

EIP-1559 in brief detail

The current first-price auction model we have doesn’t work that well. It can create spikes in gas prices and even create ridiculous situations when transaction cost is higher than an NFT we’re trying to buy.

This system was working quite well in the beginning. Still, since the DeFi rise, AMMs, and other products, it became easier to create your own trading bot/arbitrage bot that works constantly, 24h/7 trying to snipe great arbitrage opportunity. This created a massive issue within the Ethereum space, where gas prices were higher than ever, constantly for long periods. There is ongoing gas war which we’re winning.

EIP-1559 fees model will change the sudden spikes in the gas prices and make the gas prices more predictable, both for users and miners. It introduces two different types of fees, i.e., the base fee and inclusion fee.

The Base fee will be a fixed-per-block network fee which transactions are required to pay. This fee will be adjusted on a block-by-block basis, making it more predictable and stable in growth. The base fee is targeting such value, so that average block gas usage remains around 12.5 million.

Simply, if the blocks are above the gas target limit (12.5M), this base fee will increase, and when they are below the gas target limit, base fee will decrease. Block size limit can get expanded to 2x of the gas target in times of high network congestion.

When the network congestion is higher, the base fee will be higher, and when the network congestion is lower, the base fee will be lower. In other words, EIP-1559 is trying to stabilize the Base fee, network congestion, and block size.

EIP-1559 will be packaged with the London hard fork in July this year, regardless of the mining industry’s dissatisfaction with the proposal. More on that in one of my previous articles titled "The Docking" of Ethereum.


There is a great YouTube channel called “Finematics” that goes into more details about the EIP-1559 and its effects. Instead of re-telling the same thing differently, I  focused on the basics, and I will let you watch Finematics great explanation of the proposal.

Thanks for reading, and I hope you learned something new today. It is the 10th post on the 10th day of my 100 Days of Blogging journey. It's an experiment for me, and I don't know where I'm going with this. I'm just focusing on sharing my thoughts and ideas about Blockchain technology and bringing you closer to this exciting future!