What stories does EIP-1559 bring on the first anniversary of Ethereum’s London upgrade?

In 2021, Ethereum experienced two rounds of relatively important hard fork upgrades. The first was the Berlin hard fork at block height 12,244,000. The upgrade included various optimizations to the contract, covering gas efficiency, updates to the way the Ethereum Virtual Machine (EVM) reads code, and other changes to prevent DDOS attacks.

If the Berlin hard fork upgrade was just some minor repairs on the basis of Ethereum at the time, then the London hard fork upgrade completed at block height 12,965,000 (August 5, 2021 Beijing time) was a "reform" of Ethereum's Gas mechanism.

The London hard fork upgrade includes 5 core improvements :

• EIP-1559 (Fee Market Reform)

• EIP-3198 (BaseFee opcode)

• EIP-3529 (reduce gas refunds, invalidate gas tokens, serve EIP-1559)

• EIP-3541 (reject new contracts starting with 0xEF)

• EIP-3554 (difficulty bomb postponed to the first week of December 2021)

The most popular one in the market is EIP-1559, which proposes a mechanism to optimize Ethereum transactions, aiming to make transaction fees on the Ethereum network more predictable and solve the problem of the previous "pay as you go" charging model. The goal of EIP-1559 is to create a more efficient charging market and simplify the Gas fee payment process for clients and application software, thereby eliminating the potential for users to pay unnecessary high Gas fees.

In simple terms, EIP-1559 makes Gas fees "predictable". BaseFee is public, and if you want the transaction to be confirmed as soon as possible, you can use tips to let miners increase the priority of packaging transactions. Before this, Gas fees have always adopted a non-public bidding model, making Gas fees difficult to predict, and some transactions paid more costs than actually needed to be packaged as soon as possible. In addition, due to the destruction of BaseFee, Ethereum's inflation rate has also been reduced to a certain extent compared to before.

It has been one year since EIP-1559 was officially implemented. During this year, the destruction of BaseFee brought about by EIP-1559 has produced a lot of interesting data.

Total Destruction

According to data from ultrasound.money, as of block height 15276831 (00:00:02 Beijing time on August 5, 2022), the total amount of Ethereum destroyed reached 2,571,183.34, which is worth approximately US$4.14 billion at the current price.

Within 24 hours after the London hard fork upgrade was completed, about 4,700 Ethereum coins were destroyed; within a week after the upgrade was completed, more than 30,000 coins were destroyed.

After that, the amount of Ethereum destroyed exceeded 50,000 on August 16, 2021; exceeded 100,000 on August 26, 2021; exceeded 200,000 on September 5, 2021; exceeded 500,000 around October 11, 2021; exceeded 1 million around November 24, 2021; and exceeded 2 million around March 21, 2022.

During this year, the number of Ethereum newly issued was 4,623,662, and the number of destroyed Ethereum coins accounted for about 55.61% of the total issuance, which reduced the inflation rate of Ethereum to 2.4% in one year. According to Nansen data, the number of transactions supporting EIP-1559 has been stable at around 80% recently, but suddenly dropped to 60% yesterday. The reason is not yet known.

In addition, according to data from The Block, the highest single-day destruction of Ethereum occurred on May 1 this year, with approximately 71,720 Ethereum destroyed in a single day, which was nearly 60,000 more than the amount of Ethereum issued on the same day.

Project destruction amount

According to data from ultrasound.money, the top ten Ethereum contracts destroyed are (some data may have errors):

• Ethereum transfer (237,438.18)

• OpenSea (230,049.80)

• Uniswap V2 Router 2 (135,647.61 pieces)

• Tether (112,497.21)

• Uniswap V3 Router 2 (90,035.51 pieces)

• OpenSea trading contract (70,772.36)

• Otherdeed (56,008.67 pieces)

• MetaMask transaction routing (51,032.13 pieces)

• USDC (48,057.74)

• Uniswap V3 Router (47,663.68 pieces)

In the Ethereum destruction list compiled by ultrasound.money, there are DeFi protocols including SushiSwap, 1inch , Aave , 0x, and Paraswap; Ethereum expansion networks including Polygon , Arbitrum , Optimism , Gnosis Protocol, and zkSync ; and exchanges including Gemini, Kraken , KuCoin, Bitstamp, Coinbase , and Binance . In addition, there are also protocols such as Axie Infinity , Shiba Inu, Genie, Gem, Chainlink , DAI, Tornado Cash, ENS, LooksRare , dYdX , ApeCoin, and Hop Protocol.

It is worth mentioning that due to the continued popularity of the NFT market in the second half of last year and the first half of this year, the amount of Ethereum destroyed by OpenSea contracts has long occupied the top position. However, recently, as the NFT market continues to cool down, the amount of Ethereum transfers destroyed has surpassed OpenSea and ranked first.

In addition, according to data from ultrasound.money, the amount of Ethereum destroyed in NFT-related contracts in the past year reached 956,027, accounting for 37% of the total destruction; the amount of Ethereum destroyed in DeFi-related contracts reached 755,607, accounting for 29% of the total destruction; in addition, MEV transactions destroyed 66,609 Ethereum and Layer 2-related contracts destroyed 25,176 Ethereum.

Other data

In just one year, EIP-1559 has brought a lot of interesting data and stories.

After the upgrade, the gas consumption increased instead of decreased?

Just after the London upgrade, which claimed to solve the problem of excessively high gas costs, the gas fee did not decrease but increased, which triggered community discussions. Ethereum developer trent.eth tweeted that there are five main reasons for this:

• Service providers including exchanges disabled some functions (such as deposits and withdrawals) during the upgrade, resulting in a concentrated surge in demand after the upgrade was completed;

• There are some massive NFT airdrops going on;

• Some miners set the Gas Limit below 30 million, resulting in the actual Gas usage rate of each block being less than 50%, exacerbating the congestion on the chain;

• Ethereum secondary market price fluctuations;

• Users are sending a large number of transactions to try out the new features brought by EIP-1559.

The upgrade results were not satisfactory

At the end of September of the same year, Bitfinex 's wallet transferred 100,000 USDT with a gas fee of 7,676.62 Ethereum (worth over 20 million US dollars at the time). According to the information on the chain, there may be multiple parameter settings errors in this transaction, resulting in abnormal gas fees, but the transaction only destroyed about 0.0085 ETH . At that time, the Ethereum overseas community believed that the arrival of EIP-1559 would reduce such outrageous mistakes, but in fact it seems that this did not happen.

Miner income

Before the London upgrade began, some mining pools and miners opposed the upgrade because they were worried that the upgrade would reduce their own mining income, and even threatened to fork Ethereum, but in the end, they were powerless and nothing came of it. On August 29, The Block published a report saying that although Ethereum, which was the BaseFee, was destroyed, the miners' income in US dollars remained basically unchanged. On the one hand, it was due to the rise in Ethereum prices, and on the other hand, the hot NFT market led to the tip income to recover some of the losses caused by EIP-1559.

According to data from The Block, the total income of Ethereum miners basically maintained the 2021 level until May this year, and only showed a significant decline after the Ethereum price plummeted. This shows that the income of Ethereum miners has not actually declined significantly due to the implementation of EIP-1559. At the same time, this also indirectly shows that although EIP-1559 theoretically reduces the possibility of "wasting money", it has not really reduced the cost on the chain.

Gas War

At the end of the month (August 28) when the London upgrade was completed, the Adam Bomb Squad NFT released by the clothing brand The Millions kicked off the first "Gas War" since the Ethereum Gas policy was updated. About 1,908 Ethereum were destroyed within an hour of the NFT being available for sale, and Gas once soared to 1,500 GWei.

The smoke of the first Gas War has not yet dissipated. Three days later, the NFT project Fatales started another Gas War. The number of Ethereum destroyed in this rush purchase within 1 hour was about 1,080. Although the amount destroyed was less than the first battle, Gas once soared to around 2,000 GWei.

In September of the same year, the third Gas War broke out. A project called sipherNFT also destroyed more than 1,000 Ethereums in one hour, causing the Gas fee to soar to a maximum of around 3,000 GWei.

After the “Three Guns Surprise”, every time a popular NFT project starts selling or minting, it will cause a bloody storm on Ethereum. Among these stories, the most amazing Gas War took place on May 1 this year.

At 9:00 am Beijing time on May 1, 2022, the Yuga Labs metaverse project Otherside land NFT Otherdeed started casting. In just 1 hour, the casting contract destroyed more than 26,000 Ethereum, and the on-chain Gas fee soared to nearly 10,000 GWei. 24 hours after the start of casting, Otherdeed's trading volume on OpenSea reached nearly 12,300 Ethereum, and the contract destroyed more than 42,000 Ethereum, breaking into the top ten Ethereum destruction list in just one day. After the implementation of EIP-1559, the project set a number of Gas-related historical records on May 1. The single-day Gas destruction record mentioned above is also the credit of Otherdeed, and this record is likely to be difficult to break in a short time.

Ethereum celebrated its 7th birthday last Saturday. In the past 7 years, Ethereum has come out of doubts and exploded in the bull market last year. With EVM becoming the "standard" of many new public chains , Ethereum has grown into an important benchmark in the Web3 industry. EIP-1559 in the London upgrade has brought many wonderful stories. Although it is impossible to list them all here, this does not prevent the wheel of history from continuing to roll forward. With the upcoming merger and Vitalik Buterin's vision after the merger, Ethereum's future will definitely have more exciting stories for people to write.