How Does EIP-1559 Affect the Predictability of Gas Fees for Smart Contract Execution?
EIP-1559 introduced a 'base fee' that is algorithmically adjusted based on network congestion, making transaction costs more predictable than the previous auction-style system. It also allows users to specify a 'priority fee' (tip) to incentivize miners.
The base fee is burned, which adds a deflationary element. This change helps users estimate transaction costs more accurately, which is vital for complex smart contract interactions.
Glossar
Gas Fees
Mechanism ⎊ Gas fees represent the computational cost required to execute transactions or smart contracts on a blockchain network, particularly Ethereum and its Layer-2 solutions, functioning as a deterrent against denial-of-service attacks and a reward for network validators.
Eip-1559
Upgrade ⎊ EIP-1559, or Ethereum Improvement Proposal 1559, represents a significant upgrade to the Ethereum network's transaction fee mechanism.
Predictability
Variance ⎊ Predictability within cryptocurrency, options, and derivatives markets reflects the degree to which historical data informs future price movements, a crucial element for risk assessment and strategy development.