What Is the Role of EIP-1559 in Modifying the Ethereum Fee Market?

EIP-1559 introduced a mechanism that replaced the simple first-price auction with a base fee and a priority fee (tip). The base fee is algorithmically adjusted based on network demand and is burned, making Ether deflationary.

The priority fee goes to the validator. This change aimed to make transaction costs more predictable and reduce the extreme volatility seen in the previous fee structure.