October 16, 2020
By Sam Grant
According to a blockchain data firm Dune Analytic, implementation of EIP-1559 proposal would have resulted in almost 1 million ETH burning
The contentious Ethereum Improvement Proposal would have burnt 970,000 Ether (translating to over $360 million) in the last year, had it gotten approval. The proposal aimed to lower transaction fees on the network by adopting the flat fees approach alongside a burn mechanism.
This controversial approach has triggered debates and raised concerns within the Ethereum community. Most ETH users have expressed their frustrations due to delays in implementing the proposal.
A crypto user by the handle Laur Science on Twitter proposed that the proposal should be incorporated when the the next hard fork is carried out saying, “Hopefully, we don’t keep discussing this for two more years while miners get too much $ETH and dump it for $USD, keeping the $ETH price in check”.
Interestingly, the concept of burning fees has been an option even before the first block was mined on ETH. EIP-1559 is, however, the first proposal to recommend incorporating the idea into the network. The EIP-1559 proposal suggests that all transactions on the ETH network have a standard flat base fee that is then to be burnt. The reward for miners will be obtained from tips on top of the fee by the network users.
The proposal has an allowance to vary the base fee such that block sizes are maintained around 10m gas, geared toward introducing a predictable fee system and increased security. As you’d expect, due to the impact on the revenue they will earn, the mining community has shown resistance and backlash at the proposal. ETH miners have been getting satisfactory returns over the past few months.
Messari recently reported that Ethereum has taken up more fees than Bitcoin in the last two months – a record streak. Around the same time, Tim Beiko, a ConsenSys developer posted the findings of a survey on the fee proposal. Eight of the nine mining firms said they would turn down the new EIP-1559 proposals if it’d be introduced as a hard fork.