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Ethereum’s EIP-1559 “does not deliver” as it is “not intended to lower fees”

Ethereum Improvement Proposal (EIP) 1559 is one that keeps going on – discussions, that is. What it doesn’t is “deliver,” argued the founder and CEO of the popular Ethereum (ETH) -focused wallet manager MyCrypto, but received numerous counter-arguments along the way. Source: Adobe / Tobias Arhelger

The controversial and much discussed EIP-1559 had been led to a failed “educational show of force” by reports of “likely” miners’ support. However, this bringer of a token burn mechanism and automatic fee setting is included in the upcoming upgrade known as the London Hard Fork and is scheduled for this July.

Unfortunately, while many users took an interest in this suggestion, “the social appeal seems to be largely due to the not-so-subtle promises of“ $ ETH price up! ”And / or“ TX fees down! ”. [while] The early promises of reducing overpayments, market efficiency, fee stability, and even reduced TX fees seem ….. not really a thing, Taylor Monahan said on her Twitter thread.

EIP-1559 is “a fundamental shift to a sprawling live network of people, machines, systems, and subsystems, each with massive financial incentives,” and while Monahan said it was even ready to “sacrifice a perfectly perfect solution if it did.” would mean more “. People became more empowered to improve the system “- one must always think about how the proposals work in reality, not in theory.

The reality that seems to be missing from EIP-1559 is that people are paying for what is recommended by customers, wallets, and APIs with random pricing, or a little less than what they are making in executing a transaction “the prevailing market price” means’.

While the gas price or priority fee can be influenced by many EIPs, miners, network security needs, and other factors, “the only thing that determines what people pay is what the market pays,” Monahan said. The market only sets a well-founded, ie efficient, price if the participants “meet their needs vs.

And since EIP-1559 seems to ignore a lot of it, it won’t change what users pay for transactions or reduce complexity for the user. “When [ETH] the price increases yours [transaction fees] are [gonna] go waaaay up, “claimed Monahan.

The CEO added that Geth, Etherscan, EthGasStation, MetaMask, MyCrypto and everyone else are currently determining gas prices by looking at recent transactions and then showing users a range of costs with “their roughly assigned ‘time til mined.” ‘Values ​​”on the user can roughly indicate where his personal costs intersect in comparison to the timelines.”

She concluded that

“If the information wallets / UIs / Apis / people are used to manage the [transaction] The cost won’t change … And the [transaction] the costs for the users will not decrease (until it comes into effect again -> significantly lower demand) … What exactly do we want to achieve here? “

“Reduce overpayment of transaction fees, not lower fees”

The debate about the gas price then developed.

Ethereum Foundation researcher Barnabé Monnot argued that the main point is not to mix the dynamics of the gas price with the dynamics of the priority fee under the incoming EIP. These are structurally different, and this is the source of most of the benefits of the User Experience (UX) proposal.

“So applying (hard-won) lessons about gas price behavior today would likely result in a bad UX below 1559 and negate most of its benefits. Wallets can still rely on most of the infrastructure developed so far and refine them over time once 1559 goes live, “said Monnot.

According to developer James Hancock, EIP-1559 reduces overpaid transaction fees, but not fees. “People who estimate the fee based on other people’s estimates is exactly what we have in an overpriced market,” he claimed, adding that the user at EIP-1559 asks the protocol for the basic fee and pays for it . “The miner’s tip rarely changes and has its own nuances that people get lost in. Don’t get lost! 1559 is undoubtedly a better fee mechanism.”

Other commentators also made their counter-arguments on Monahan’s thread, with many saying that no one was claiming the proposal would lower transaction fees, just that everyone on the same block would pay the same price and therefore bid high without worrying about one Having to overpay as well as that it has promised negative inflation that it will deliver.

Some have suggested that the EIP is shifting valuation from miners to ETH owners; that the supply of block space can now respond elastically to demand up to twice the average size, thereby mitigating periods of rapid demand without compromising long-term blockchain size; and that Monahan is just a contrarian.

Ethereum Name Service (ENS) founder and lead developer Nick Johnson argued that Monahan may have received “bad advice” regarding UX. “Unless a user has to take their transaction into the next blocks, they shouldn’t have to set the miner’s tip (“ priority fee ”) to anything above the minimum,” he said, but instead set the maximum fee.

In the meantime, the tips above the minimum are “almost exclusively” used by users who “absolutely” need to add their transactions to the next blocks, which are mostly automated processes, Johnson said, adding:

“If it works as planned, I think it will * reduce * overpayments, offer more predictable fees, and better UX. It certainly won’t deliver * lower * fees, and anyone who tells you they know what’s going to happen to the ether is lying or deceiving the price. “

7-day moving average. Source:


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Learn more:
– What EIP 1559 brings to the Ethereum table
– Ethereum fees remain high even with EIP-1559 – says another analyst

– Bitcoin Transaction Fee Estimator: What Are They And How Do You Use Them?

– Why Ethereum Is Far From “Ultrasonic Money”
– The Ethereum Economy is a house of cards

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