How Does EIP-1559 Change the Way Ethereum Transaction Fees Are Calculated?

EIP-1559 introduced a new fee structure that includes a mandatory BASE FEE which is algorithmically adjusted based on network congestion and is burned (destroyed). Users also specify a small optional PRIORITY FEE (or tip) that goes directly to the miner as an incentive.

The old system was a simple auction where the entire fee went to the miner. This change makes fees more predictable and improves user experience.