Why Is the Base Fee Burned Instead of Going to Validators?
The base fee is burned to prevent validators from manipulating the fee market by artificially filling blocks with their own transactions to collect high fees. Burning the base fee removes this incentive, ensuring validators only earn the priority fee (tip) and the block reward.
This mechanism also introduces the deflationary pressure on the coin.
Glossar
Validators
Role ⎊ Validators are the network participants, typically in Proof-of-Stake systems, responsible for verifying the correctness of new transactions and proposing new blocks to be added to the blockchain ledger.
Priority Fee
Incentive ⎊ The priority fee, often referred to as a tip, is an optional payment included in a transaction to incentivize validators to prioritize its inclusion in the next block.
Eip-1559
Upgrade ⎊ EIP-1559, or Ethereum Improvement Proposal 1559, represents a significant upgrade to the Ethereum network's transaction fee mechanism.
Deflationary Pressure
Mechanism ⎊ Deflationary pressure within cryptocurrency, options, and derivatives manifests as a reduction in available liquidity coupled with a contraction in market valuations, often stemming from factors like token burns, reduced minting rates, or deleveraging events.
Burning the Base Fee
Action ⎊ Burning the Base Fee is a programmatic action within a blockchain's transaction processing mechanism where the mandatory minimum fee component is permanently destroyed.
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.