Miners strongly oppose it, why does Vitalik Buterin still support EIP-1559?

Source: Tantan Blockchain

Original title: "Why Vitalik insists on EIP-1559 proposal despite miners' opposition"

Author: Tan Guopeng, Founder of Ownbit

There have been a lot of articles about EIP-1559 recently, but they are generally obscure and difficult to understand. I will use more popular language to talk about my understanding of EIP-1559.

EIP-1559 is a proposal to improve the Ethereum fee mechanism. It was proposed by Vitalik et al. in April 2019 and has been discussed and optimized for nearly 2 years. Although it is only an optimization proposal for Ethereum, the corresponding mechanism has been adopted by Filecoin. Therefore, it is convincing both in theory and practice!

However, the opposition and doubts about EIP-1559 are as obvious and strong as those in favor of it. Therefore, it is full of controversy and there are some risks to its implementation (forks, boycotts, etc.).

The simplest EIP-1559 principle

The current Ethereum fee mechanism is: fee = gasPrice* gasUsed. Because the gasUsed used by a specific transaction usually does not change, the core element of the entire fee is gasPrice. Adjusting the size of gasPrice determines how much you spend on fees and how quickly your transaction is confirmed.

EIP-1559 splits the gasPrice parameter into two parameters: BaseFee + Tip. BaseFee is determined by the system and does not need to be specified by the user. Tip (also called GasPremium) refers to the additional tip, which determines the priority of sorting under the same BaseFee.

BaseFee

BaseFee is calculated by the system. You can skip the specific logic completely, and it will not affect your understanding of EIP-1559. Here is a brief explanation of its calculation logic:

The average value of total GasUsed for each block is 12.5 million, and the upper limit is 25 million;

When the total gas used by the actual block exceeds the average point, the BaseFee is increased, and when it is lower than the average point, the BaseFee is reduced.

Therefore, BaseFee will fluctuate according to the size of network traffic. If we look at Filecoin's BaseFee chart, we will have some sensory understanding:

Fiecoin BaseFee

In the EIP-1559 design, the BaseFee portion of the transaction fee is directly destroyed (only the Tip portion is rewarded to miners) to resist the inflation of the Ethereum system. This point is also a key point that miners may resist. Some people believe that this will greatly reduce the income of miners. The design of this point is relatively independent, so we will not discuss it in detail.

What is EIP-1559 for?

What is the use of EIP-1559? This is the main topic we are going to discuss today. First, let me explain my point of view: it is not very useful, but it has some small uses. Let me explain them separately:

EIP-1559 doesn’t have any “big” effect

It has no significant effect means that it cannot reduce network congestion, that is, it is not designed for expansion. Therefore, after the implementation of EIP-1559, Ethereum will still be congested. (You may think that my point of view above is wrong. EIP-1559 may have some expansion effect because the hard cap is set at 25 million, which is twice the current amount, so it may have twice the expansion effect. This is correct. The reason why I didn’t say that is because this expansion effect does not need to be achieved through EIP-1559. It can be achieved by simply increasing the upper limit of the total gas volume of the block, so it will not be discussed).

In addition, it has no significant effect, which means that it cannot significantly reduce user mining fees. The essence of user mining fees is determined by supply and demand. In the case that Ethereum cannot effectively expand and demand is too strong, any measures to change the fee mechanism will be futile for the goal of reducing fees!

EIP-1559 has some "small" effects

First of all, the small I am talking about here refers to the above two major goals (reducing congestion and reducing handling fees). Therefore, the small here is not derogatory, but refers to a degree.

Usually, transactions issued by users can be divided into three situations:

Case A: The transaction must be confirmed in the next block, such as some hijacking transactions or transactions involving a certain ICO. Users will do whatever it takes to get it confirmed quickly.

Case B: The user expects the transaction to be confirmed quickly, for example, within 5 minutes. It does not necessarily have to be in the next block, but the user does not want to wait too long, for example, the user tops up the exchange and buys and sells digital currency;

Case C: The user wants to confirm a transaction with less mining fee and does not mind waiting for a few more hours or even days.

For situation A, EIP-1559 does not play a big role. In the case of EIP-1559, in order to achieve the goal of situation A, we need to calculate the appropriate Tip, which is no different from calculating the appropriate gasPrice now.

For situation C, EIP-1559 also has no advantage. We set a GasFeeCap (handling fee cap) to achieve this goal, which is no different from our current setting of a fixed smaller gasPrice.

But for case B, EIP-1559 has a huge advantage. From the perspective of users or wallet developers, almost nothing needs to be done to achieve this goal. Within the set GasFeeCap range, your transaction can always enter the block at the current BaseFee price. In the case of fixed Tip, the mining fee you spend is determined by the system.

Therefore, this is the most worry-free and user-friendly. Before EIP-1559, in order to achieve the goal of situation B, we may need to send transaction acceleration (Replace-by-Fee) multiple times.

The essence of EIP-1559 to achieve the above goals is to postpone the mechanism for determining the handling fee. That is, before EIP-1559, the size of the handling fee was determined when the user generated the transaction, while EIP-1559 splits the handling fee into two parts, and the BaseFee part is determined in real time during packaging. This is similar to the concepts of delayed loading and loading when needed that are often mentioned in programming environments.

The above situation B is also the most common situation, so the implementation of EIP-1559 will have a significant impact on users. It will reduce the need for users to intervene in transactions and will also be more economical (the system's BaseFee is always more economical than the fees chosen by users).

Summarize

From the perspective of user end and wallet development, the role and significance of EIP-1559 cannot be said to be small. Although it cannot solve the problem of congestion, nor can it significantly reduce transaction mining fees, it can make the Ethereum system fee smoother and the user experience of using Ethereum transactions more friendly. Therefore, I think this is also the main reason why the technology-oriented Vitalik insisted on EIP-1559 in the face of great controversy!