EIP-1559——The script of Bitcoin fork in 2017 may be reproduced on Ethereum

Those who have experienced the bull market in 2017 basically know about the dispute over the size of Bitcoin blocks. Although the New York and Hong Kong conferences basically determined the expansion measures of Bitcoin at that time, after Segwit, many people were still confused about the future of Bitcoin, which also led to Bitcoin not having much growth in the first half of 2017.

After that, the debate in the community made the voices of Bitcoin fork louder and louder, and many people took a wait-and-see attitude until the fork was about to happen, and then the price of the currency saw a big rise. In essence, the Bitcoin fork is a battle between miners and core groups, and each group chooses for its own interests.

Although this scene has passed, Ethereum is currently facing similar problems and troubles, that is EIP1559.

EIP1559 is a fee improvement plan proposed by Vitalik, the founder of Ethereum. In simple terms, EIP1559 divides the miner's fee into two parts: basic fee and tip. The basic fee rate is the minimum requirement for transactions to be included in the chain. Each transaction must pay the same basic fee, which can ensure that your transaction is included in the chain. This part of the basic fee will also be destroyed after being included in the chain, which is beneficial to all Ethereum holders. The remaining tip is the handling fee received by the miner. It is said that the tip is mainly to compensate for the increased risk loss of miners when they include transactions in the uncle blocks in the block. It is generally a relatively fixed value, so such a tip naturally appears to be much less.

In this way, the transaction fees on the chain will be reduced a lot. Secondly, a large part of the transaction fees are not received by the miners. Therefore, we can understand EIP1559 as a proposal to reduce the income of miners. EIP1559 reduces the income of miners because the miners who originally received the transaction fees need to destroy part of the income as required, which benefits all coin holders.

There is such a conspiracy theory, which talks about the explosion of DeFi on Ethereum in June 2020, which made many people start to pay attention to the Ethereum DeFi ecosystem. At that time, the on-chain fee was less than 10 GWEI, and everyone paid according to the previous congestion standards. However, the big mining pools and miners discussed at this time to do their best to continuously transfer transactions from left to right on Ethereum, so as to increase the overall level of GAS fees. In the end, the fees rose sharply until 50 or 60 GWEI or even more than 100 GEWI. Most of the transfer fees of miners finally returned to their pockets in the form of mining, but the high fees were difficult to come down due to market demand. This situation is similar to the hype of digital currencies. In the bear market, the price is low and no one buys. When the bull market comes, the price is hyped up. In the end, the price of the currency is high and it is difficult to fall for a while, so that miners can get more profits.

EIP1559 is a powerful weapon against miners. Some mining pools have expressed their views and pointed out that EIP1559 infringes on the interests of miners.

The debate over Bitcoin's expansion is mainly between large blocks and small blocks. Large blocks have gained a lot of support because they can accommodate more transaction data and increase miner fees. However, large blocks are not conducive to the implementation of decentralization and will increase the burden on full nodes. Therefore, the problem can only be solved through forks. Currently, there are very few full nodes on Ethereum, and most people only use light nodes. Therefore, the key to the problem lies in the fees.

We assume that the basic fee and tips each account for half, then for miners, the daily income will be reduced by half. Although the basic fee will be destroyed, relatively speaking, the income of miners will still be reduced a lot. Not only will EIP1559 significantly reduce the miners' transaction fee income, but the development of Ethereum 2.0 and L2 will also greatly reduce the miners' income level. In other words, if L2 can be widely used in the future, then EIP1559 is actually not needed at all, and miners do not have enough motivation to maintain high on-chain transaction fees, so the on-chain transaction fees will naturally decrease.

In this way, EIP1559 seems a bit redundant, and because it affects the interests of miners, it is also easy to cause the risk of another fork of Ethereum. After all, for miners, there was L2 and Ethereum 2.0 switching to POS, and then EIP1559 greatly reduced transaction fee income. In fact, Ethereum miners will still have great difficulties in the future.