# How Is the 'Base Fee' Determined under Ethereum's EIP-1559? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## How Is the ‘Base Fee’ Determined under Ethereum’s EIP-1559?

The Base Fee is algorithmically calculated based on the difference between the previous block's size and the target block size. If the previous block was over the target, the Base Fee increases by up to 12.5%.

If it was under, the Base Fee decreases. This mechanism dynamically manages block utilization to keep it close to the target capacity and makes fee prediction easier.

- [How Does EIP-1559 Affect Gas Fee Predictability?](https://learn.greeks.live/path/how-does-eip-1559-affect-gas-fee-predictability/)

- [How Is the Base Fee Calculated before It Is Burned?](https://learn.greeks.live/path/how-is-the-base-fee-calculated-before-it-is-burned/)

- [How Does the EIP-1559 Upgrade Affect Ethereum’s Gas Fee Structure?](https://learn.greeks.live/path/how-does-the-eip-1559-upgrade-affect-ethereums-gas-fee-structure/)

- [How Has Ethereum’s EIP-1559 Changed the Dynamics of Gas Fee Bidding?](https://learn.greeks.live/path/how-has-ethereums-eip-1559-changed-the-dynamics-of-gas-fee-bidding/)

- [What Is the Concept of ‘EIP-1559’ regarding Ethereum Gas Fees?](https://learn.greeks.live/path/what-is-the-concept-of-eip-1559-regarding-ethereum-gas-fees/)

- [How Does EIP-1559 Relate to the Ethereum Fee Market?](https://learn.greeks.live/path/how-does-eip-1559-relate-to-the-ethereum-fee-market/)

- [How Does EIP-1559 Change the Fee Market on Ethereum?](https://learn.greeks.live/path/how-does-eip-1559-change-the-fee-market-on-ethereum/)

- [What Is the Role of EIP-1559 in Modifying the Ethereum Fee Market?](https://learn.greeks.live/path/what-is-the-role-of-eip-1559-in-modifying-the-ethereum-fee-market/)

## Glossar

### [Base Fee](https://learn.greeks.live/area/base-fee/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

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.

## Discover More

### [How Is the Discount Rate (WACC) Determined for a Highly Volatile Crypto Asset?](https://learn.greeks.live/path/how-is-the-discount-rate-wacc-determined-for-a-highly-volatile-crypto-asset/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Discount Rate (WACC) Determined for a Highly Volatile Crypto Asset?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Bifurcation-of-Decentralized-Exchange-Liquidity-Pool-Mechanism-Visualization.webp)

The discount rate is a high required rate of return (20%+), reflecting extreme market, regulatory, and protocol-specific risks.

### [How Does EIP-1559 Affect Gas Fee Predictability?](https://learn.greeks.live/path/how-does-eip-1559-affect-gas-fee-predictability/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does EIP-1559 Affect Gas Fee Predictability?](https://learn.greeks.live/wp-content/uploads/2025/10/Bespoke-Material-Finishes-Interfacing-Layered-Asset-Allocation-Structures-Under-Extreme-Volatility-Profiling.webp)

EIP-1559 uses an algorithmically adjusted, burned 'base fee' to create a more transparent and predictable fee market, reducing volatility.

### [How Is the Minimum Staking Requirement Determined?](https://learn.greeks.live/path/how-is-the-minimum-staking-requirement-determined/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Minimum Staking Requirement Determined?](https://learn.greeks.live/wp-content/uploads/2025/10/Microscopic-View-of-Digital-Asset-Liquidity-Provision-Mechanism-Interface-for-Decentralized-Exchange-Order-Flow.webp)

It is set to be greater than the potential profit from a successful data manipulation attack, ensuring the economic risk outweighs the reward.

### [What Are the Fee-Bumping Rules (E.g. Minimum Fee Increase) for a BIP125 RBF Replacement?](https://learn.greeks.live/path/what-are-the-fee-bumping-rules-e-g-minimum-fee-increase-for-a-bip125-rbf-replacement/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Fee-Bumping Rules (E.g. Minimum Fee Increase) for a BIP125 RBF Replacement?](https://learn.greeks.live/wp-content/uploads/2025/10/Hypergeometric-Probability-Distribution-Modeling-Decentralized-Autonomous-Organization-Governance-Mechanism-Symmetry.webp)

BIP125 requires the replacement's total fee to exceed the original's fee plus the cost of the replacement's size, and it must have a higher fee rate.

### [How Is the Time Period for a TWAP Calculation Determined and What Are the Trade-Offs?](https://learn.greeks.live/path/how-is-the-time-period-for-a-twap-calculation-determined-and-what-are-the-trade-offs/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Time Period for a TWAP Calculation Determined and What Are the Trade-Offs?](https://learn.greeks.live/wp-content/uploads/2025/10/Minimalist-Abstract-Depiction-of-Crypto-Derivatives-Quantum-Volatility-Surface-Projections.webp)

The TWAP time period is a trade-off between manipulation resistance (longer) and price responsiveness (shorter).

### [What Is the Economic Effect of 'Burning' the Base Fee?](https://learn.greeks.live/path/what-is-the-economic-effect-of-burning-the-base-fee/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Economic Effect of 'Burning' the Base Fee?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Decentralized-Finance-Option-Structure-Unfolding-Towards-Liquidity-Pool-Access.webp)

Burning reduces the circulating supply of the asset, creating deflationary pressure and linking network value to usage.

### [How Is the Size of the Default Fund Determined?](https://learn.greeks.live/path/how-is-the-size-of-the-default-fund-determined/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Size of the Default Fund Determined?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Entanglement-Visualization-of-Intersecting-Collateralized-Debt-Positions-in-Decentralized-Finance.webp)

The default fund's size is set by stress tests simulating extreme market events to cover potential losses from member defaults.

### [How Is the Premium of a Crypto Option Determined?](https://learn.greeks.live/path/how-is-the-premium-of-a-crypto-option-determined/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Is the Premium of a Crypto Option Determined?](https://learn.greeks.live/wp-content/uploads/2025/10/Dynamic-Aperture-Mechanism-Visualizing-Open-Interest-Contract-Settlement-in-Decentralized-Exchanges.webp)

Determined by intrinsic value and time value, which is influenced by time to expiration, strike price, and volatility.

### [How Are Circuit Breaker Thresholds Determined and Do They Differ between Cryptocurrency and Traditional Stock Exchanges?](https://learn.greeks.live/path/how-are-circuit-breaker-thresholds-determined-and-do-they-differ-between-cryptocurrency-and-traditional-stock-exchanges/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Are Circuit Breaker Thresholds Determined and Do They Differ between Cryptocurrency and Traditional Stock Exchanges?](https://learn.greeks.live/wp-content/uploads/2025/10/Conceptual-Architecture-of-Decentralized-Autonomous-Organization-Governance-Staking-Mechanisms-Illuminated.webp)

Stock market circuit breakers are regulated and market-wide; crypto breakers are set by individual exchanges and vary widely.

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