The main objective of the EIP-1559 remains to reduce gas costs for its users. Thus, individuals will not pay too much for their transactions. While this may be the primary goal, there are other advantages to its application.
Slack mechanism
In simpler terms, the slack mechanism of the EIP-1559 will allow some blocks to be larger during times of heavy congestion. It will allow other blocks to be smaller during periods of minimal traffic.
Improved Ethereum Security
Once the show gets low for most blockchains in the future, the transaction fee will pay for security. It could be extremely risky if the block grant ends. Therefore, the EIP-1559 model would eliminate the dependence of network security on transaction fees.
The disadvantages will result from the feeling of the minor
According to the EIP-1559 protocol, there is a condition where BAS.E is zero. If the block extracted is below 10M (or 10 million) of gas. Thus, when BAS.E is zero, the tip offered by the user would go entirely to the minor. Therefore, if the miners decide to keep mining below 10M at any time, they will continue to earn the full fee.
However, it is important to note that a tip auction will only be launched when the demand for block space is greater than the available supply.
Although this is a legitimate concern and miners can trigger a soft fork if needed. Therefore, the threat is minimal, but the picture will only be clearer when EIP-1559 goes live.
Ethereum Monetary Policy: Does It Change Ether’s Value?
In terms of functionality, EIP-1559 has the potential to solve Ether’s transaction fee issues in theory. However, implementation can also push Ether to become a deflationary asset hit.
BAS.E controls all the logic. As mentioned earlier, users will not allocate their BAS.E to minors. Indeed, the royalty will be the subject of a burning proposal. Since the BAS.E will always be burnt, the existing Ether supply will become more valuable to investors.
However, this has certain limitations. The burn proposal can also sometimes carry a probability of inflation. But the hard cap on inflation is 0.5-2% on Ethereum, which should be avoided.
Additional note
The EIP-1559 standard should help reduce gas prices, but it may not fully do so. However, this will optimize the transaction fees paid by users. This will likewise prevent any form of overpayment that occurred during the DeFi wave of 2020.
With your eye on the horizon, successful execution of EIP-1559 may become one of the most critical updates to the value of Ether in the years to come.
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