NEWSLETTER
Péter Szilágyi, an ethereum (eth) developer, praised EIP-1559 and its eth burning mechanism as “the great equalizer.” Taking X on January 16, Szilágyi My dear EIP-1559's ability to “level the playing field between validators and regular users.”
Developer: EIP-1559 is a “great equalizer”
Since the implementation of EIP-1559, ethereum adjusted the way users offered gas fees, introducing the “base fee,” which was burned or sent to an unrecoverable wallet. So far, Ultrasound Money data sample that more than 3.9 million eth have been destroyed.
In the last week alone, the ethereum network automatically took over 21,100 eth out of circulation, “burning” the eth supply.
Specifically, Szilágyi mentioned the advantage that regular users have with EIP-1559. Through this implementation, validators (previously miners before ethereum switched to a proof-of-stake blockchain) no longer have the privilege of arbitrarily adjusting gas limits and transaction fees.
Previously, that leeway created what the developer described as an “imbalance,” making it difficult for “regular users” to compete. However, after this implementation, everyone must join regardless of their status as a validator, founder, or user.
With EIP-1559, the “base rate” setting is set at the protocol level. It is this base fee that burns the network, causing eth to gradually become deflationary, reading the number of coins withdrawn from circulation since EIP-1559 went live in early August 2021. Still, a sender can “tip ” to the validator, incentivizing them. to prioritize the validation of a transaction.
Stability and predictability achieved, ethereum advantages limited to $3,000
Szilágyi's comments reflect a growing consensus among ethereum supporters regarding the positive impact of EIP-1559. Although a large percentage of EIP-1559 is obsessed with the proposal's impact on price, there is more it accomplishes.
Most importantly, from a user experience perspective, it is now easier for senders to predict how much they will pay for a transaction. This is crucial, especially when the network is congested. Furthermore, although the ethereum gas fee remains relatively high, EIP-1559, although considered a “bad idea” by Szilágyi, has stabilized the network.
The eth burn is attributed to reducing inflation on ethereum, a network whose total supply is not capped like bitcoin. In the long term, prices could benefit from this proposal. However, prices are bullish in the short and medium term. Still, the upside is limited to around the psychological round figure of $3,000.
Featured image from Canva, TradingView chart
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