The implementation of the long-awaited EIP-1559 would have led to the destruction of nearly 1 million ETHs in the last 365 days, and miners are still against it.
If the controversial 1559 Ethereum Improvement Proposal (EIP) 1559 had been implemented over the past year, it would Bitcoin Union have destroyed 970,000 Ether (ETH), worth a total of $360 million. The EIP-1559 aims to reduce transaction fees by introducing fixed fees along with a burn mechanism.
The results, based on data provided by Dune Analytics and published by Spencer Noon, president of DTC Capital, have raised questions in the Ethereum community as to why the proposal has not yet been implemented. The user ‚Laur Science‘ suggested on Twitter to introduce it in the next hard fork, adding:
„Hopefully we won’t waste another two years discussing it while the miners receive too much $ETH and sell it for $USD, keeping the price of $ETH under control“.
Cumulative amount of ETH burned with EIP-1559
Cumulative quantity of ETH burned with EIP-1559. Source: Dune Analytics
Although the idea of destroying commissions has been considered for some time, even before the Ethereum genesis blockade in 2015, EIP-1559 is the first serious proposal to integrate the concept into the Ethereum code.
The current proposal, initially suggested in 2018 by Vitalik Buterin, would drastically change the way transaction fees are calculated. EIP-1559 proposes to apply a standard fixed cost to all transactions, called ‚basefee‘. This fee is destroyed and the incentive for miners comes from adding a ‚tip‘ from users in addition to the standard cost.
The proposal allows the basefee to be modified to help keep the block size around 10 million gas. This initiative has four structural objectives: predictable commissions, constant block size, increased security and preventing economic abstraction (payment of commissions with other tokens).
Because EIP-1559 will significantly influence the way miners earn money, it has provoked resistance from the mining community, which has recently been seeing substantial revenues. A week ago, Messari said Ethereum’s commissions exceeded Bitcoin’s for two months in a row, a record-breaking period.
On the same day, Tim Beiko, developer of ConsenSys, published the results of a survey of the proposal among 25 teams building on Ethereum. Sixty per cent of respondents were in favour, but eight of the nine mining companies contacted said they would reject the proposal if it was implemented as a hard fork.
Earlier this year, Metamask’s lead developer, Dan Finlay, expressed concerns about entrusting miners with the responsibility for regulating the basefee parameters. In addition, Finlay suggested that the net effect of the proposal would be „to make the tip a sort of one-price auction within each block reproducing all the problems of the current market but with the added complexity of this.
Nick Johnson, developer of Ethereum Name Service, made his concerns about the proposal known, due to the „lack of formal analysis demonstrating that 1559 will behave as expected.
In July, responding to the problem of ever-increasing fees, Vitalik Buterin again invoked EIP-1559 as the definitive solution.
„Revenue from transaction costs is now almost half the revenue from the block reward. This actually risks making Ethereum *less* safe. The commission market reform (EIP-1559) solves this problem; another reason why this EIP is important“.
Less than a month after Buterin’s tweet, total transaction fees for Ethereum exceeded those for Bitcoin (BTC), before rising sharply to new all-time highs.
This is not the first time that an EIP has divided the Ethereum community due to misaligned goals. Last month, EIP-1878, which would reduce the block reward by 75%, was also strongly criticized by the mining community.