With EIP 1559 just around the corner, you might be thinking, “how will it effect the GasSwap Protocol?” Well let’s have a look shall we?
TLDR;
Even after the implementation of EIP 1559, Ethereum will still experience large fluctuations in gas price. Read on if you would like to find out why…
This article is not intended to be an in depth guide into EIP 1559. For a detailed guide on EIP 1559 we highly recommend watching the following Finematics video on YouTube:
https://www.youtube.com/watch?v=MGemhK9t44Q
(Actually, we recommend watching all Finematics videos!)
Why does gas price fluctuate anyway?
Gas price fluctuates due to limited space in each block. When a user wants to perform a transaction on Ethereum, they must select a gas price. When more users want to perform transaction on Ethereum, they are essentially fighting for space on the same block, meaning the user who submits the highest gas price gets the space on the block, and gets their transaction completed.
This is a problem as it leads to users over-bidding and selecting gas prices which are too high. For example, a user might want to perform a transaction urgently, so they select a gas price of 150 wei, when in actual fact, the required gas price at the point in time may have been just 50 wei.
Gas prices after EIP 1559…
EIP 1559 does not aim to reduce gas fees. It actually aims to make gas fees more predictable. It does this by introducing a “base fee.” A base fee is the minimum fee which a user needs to pay to be included in a block. This base fee fluctuates depending on how much the network is being used, and can actually increase or decrease by 12.5% per block.
This doesn’t change the fact that when more users want to perform transactions at the same time, gas prices will go higher, and the opposite when less users want to use the network.
We hope you enjoyed the quick explainer on how EIP 1559 will effect the GasSwap Protocol. Again, this is not intended to be an in depth guide into EIP 1559, and if you want to find out more there are some great resources out there.
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