Using Ethereum (ETH) has increased around 500% since April. Due to this situation, there is a serious increase in transaction fees.
While average gas charges are not at the all-time highs seen in July 2018, they are still higher than average. Although this problem will decrease with Ethereum 2.0 update, it still poses a problem for users.
With the update, called Ethereum Improvement Proposal (IEP) 1559, developers aim to reduce the transaction costs of the network.
EIP 1559, first introduced in April 2019, is based on an August 2018 article about Ethereum’s price auction model, written by Ethereum co-founder Vitalik Buterin. EIP was first co-authored by Etherinum developers Eric Conner, Rick Dudley, Matthew Slipper and Ian Norden, in addition to Buterin.
According to Ethereum Foundation researcher Barnabé Monnot, EIP 1559 tries to resolve the wage pressure by applying “algorithmic price discovery”. This update aims to solve problems by dynamically changing the size of blocks based on the number of transactions in the queue between certain thresholds, and pricing certain users when demand is rising too high.
The configuration also grows as a savior when the network is very congested, that is, when it is almost impossible to perform a transaction. Such a jam happened twice in the history of Ethereum. The first one took place in the rise times of CryptoKitties in 2017, and the other happened on March 12, the day passed to the markets as “Black Thursday”.
On the other hand, EIP 2593, written by MetaMask developer Dan Finlay, proposes a “escalator algorithm” that allows users to change the pay structure according to their relative needs. In short, the EIP aims to keep the transaction fee of the user at the lowest possible level by slowly increasing the transaction fee until a miner decides to include it in the next block.
This idea, which was presented to the fore among Ethereum developers, was very popular, and it is already being discussed among developers how to move this idea further.
Miners are currently rewarded with ETH to trade with a block reward and transaction fee, but the biggest problem here is that a team can easily access a mining pool and pay them fiat to make their orders come first.
With the Etheruem 2.0 update, a number of problems on the network seem to be solved, but the suggestions made by the developers are also valuable for the health of the network.