How Does EIP-1559 Affect Miner or Validator Revenue?
EIP-1559 reduces the amount of transaction fees that miners or validators receive because the base fee is burned. They now only receive the block reward and the optional priority fee (tip).
This shift reduces their reliance on transaction fees and makes their revenue stream more dependent on the priority fee market.
Glossar
Priority Fee
Incentive ⎊ The priority fee, often referred to as a tip, is an optional payment included in a transaction to incentivize validators to prioritize its inclusion in the next block.
Optional Priority Fee
Fee ⎊ Optional Priority Fee, often referred to as the tip, is the discretionary amount a user includes in a transaction specifically to incentivize a block producer to include their transaction ahead of others competing for the same block space.
Transaction Tips
Execution ⎊ Transaction Tips, within cryptocurrency, options, and derivatives, often center on optimal order routing to minimize slippage and adverse selection, particularly crucial in fragmented markets.
Validator Revenue
Revenue ⎊ The economic benefit accrued by the entities responsible for validating transactions and finalizing blocks, often augmented significantly by the capture of Maximal Extractable Value (MEV).
Revenue Stream
Composition ⎊ The Revenue Stream for a cryptocurrency mining operation is composed of two primary elements: the newly minted block reward, representing the protocol's subsidy, and the accumulated transaction fees from the confirmed block.
Transaction Fees
Cost ⎊ Transaction fees represent a quantifiable expense incurred for processing and validating transactions across diverse financial systems, functioning as a critical component of network participation and security.