How Does the Base Fee Adjust Automatically Based on Network Utilization?
EIP-1559 targets 50% block utilization. If a block is more than 50% full, the base fee increases by a maximum of 12.5% for the next block.
Conversely, if a block is less than 50% full, the base fee decreases by a maximum of 12.5%. This automatic, exponential adjustment mechanism ensures that the base fee rapidly reacts to changes in demand, keeping block utilization near the target and stabilizing transaction costs.
Glossar
Block Utilization
Measurement ⎊ This metric quantifies the proportion of a blockchain block's capacity that is actively occupied by valid transactions or operational data, reflecting network efficiency.
Base Fee Adjustment
Mechanism ⎊ The base fee adjustment represents a core component of Ethereum Improvement Proposal 1559, designed to stabilize transaction costs by dynamically altering the minimum fee required for block inclusion.
Base Fee
Cost ⎊ The base fee represents the minimum amount required to include a transaction in a block on certain blockchain networks, notably Ethereum following the EIP-1559 upgrade.