Ethereum is getting rarer: Why this ETH upgrade is an absolute game changer
On December 10th, the application for the technical proposal EIP 1559 went live in the Ethereum Github Code Repository. According to analysts, this proposal may make ETH less difficult in the long run.
Github is a repository where developers can suggest changes or additions to a codebase. Proposal EIP 1559 was uploaded to GitHub as a pull request – which means that nothing is set in stone yet.
But, if the proposal is approved (which may take longer than expected) it would have a big impact on the Ethereum blockchain.
How can EIP 1559 make Ethereum more valuable?
On the Ethereum blockchain, when users send a transaction or use a decentralized application, they have to pay a fee to the miners. The charge is called „gas,“ and as user activity on the blockchain increases, so can the gas costs.
As an example, let’s say a user wants to buy a new decentralized financial token (DeFi) on Uniswap. On a normal day, 10 to 20 GWEI would be enough to get the transaction through quickly.
But if the Ethereum blockchain network is congested and user activity is high, GWEI, the measure of gas costs, could spike to 50 to 100 at times. In this case, a transaction could cost anywhere from $ 10 to $ 100, and possibly even more depending on the size of the transaction.
The EIP 1559 proposal provides for a fixed fee for transactions. This means that users would no longer have to pay high fees even if the blockchain was overcrowded.
In return, the miners would receive a small tip as compensation for the lower fees they might receive in the future.
According to cryptocurrency analyst Alex Saunders, this proposal is making ETH less common. Saunders:
„EIP-1559 Fee Market Change pull request is now live on @github. $ ETH will get tighter, harder money & with negative net issuance, stock to flow will literally be off the charts. “
There are two reasons EIP 1559 could make ETH less common over time. First, it makes the amount of fees miners will receive more predictable, reducing the pressure to sell in the market. Second, having a fixed fee and compensation system for miners means that the issue of ETH is also predictable.