How Does the Base Fee Adjustment Mechanism in EIP-1559 Work?
The base fee adjusts automatically based on the network's utilization of block space. If the block is more than 50% full, the base fee increases for the next block to cool demand.
If it is less than 50% full, the base fee decreases to encourage usage. This adjustment happens in small, predictable increments to maintain fee stability.
Glossar
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.
Fee Adjustment Mechanism
Component ⎊ The Fee Adjustment Mechanism describes the algorithmic process by which transaction fees are determined and updated on a blockchain, often dynamically responding to network load and block size utilization.
Target Block Utilization Rate
Metric ⎊ The target block utilization rate is a key metric in blockchain networks, representing the optimal percentage of a block's capacity that should be filled with transactions.
Eip-1559
Upgrade ⎊ EIP-1559, or Ethereum Improvement Proposal 1559, represents a significant upgrade to the Ethereum network's transaction fee mechanism.