EIP-1559

EIP-1559 is the 2021 redesign of how Ethereum charges transaction fees. Before it, every transaction was a blind auction: you guessed a gas price, and if you bid too low you got stuck, too high you overpaid, and fees were maddeningly hard to estimate. EIP-1559 replaced that with a two-part fee — a protocol-set 'base fee' that everyone pays and that is burned, plus a small optional 'tip' that goes to the block proposer — making fees far more predictable.

The base fee is the heart of the reform. The protocol itself sets it, block by block, according to how full the previous block was relative to a target of 50% of the gas limit. If the last block was more than half full, the base fee rises (by up to 12.5%); if less than half full, it falls. This negative-feedback loop steers blocks toward the target occupancy, so instead of users blindly bidding against each other, the price discovers itself in response to demand. Activated in the London hard fork (August 2021), it introduced 'type-2' transactions where senders specify a maxFeePerGas (the ceiling they will tolerate) and a maxPriorityFeePerGas (the tip).

The most consequential and contentious change is that the base fee is burned — permanently destroyed rather than paid to the proposer. The rationale is incentive alignment: if proposers received the base fee, they would be tempted to manipulate it (e.g. stuff blocks with their own transactions to inflate it). Burning it removes that temptation, and as a side effect ties ETH issuance to network usage — during busy periods more ETH is burned than issued, making the supply net-deflationary. The proposer is compensated only by the tip and any MEV.

EIP-1559 did not make fees cheaper — base demand for blockspace still sets the price — but it made them far more legible and reduced overpayment and stuck transactions. Its design has since been generalized: EIP-4844 created a separate, parallel 1559-style market for blob gas, with its own independently-adjusting blob base fee.