EIP-1559

In all their infinite wisdom, Bitcoin’s anonymous inventor Satoshi Nakamoto decided that only 21 million BTC would ever exist. They wanted new coins to be released gradually into the market — but at the same time, it was crucial for a generous supply of Bitcoin to start circulating sooner rather than later.

New BTC are given to Bitcoin miners as their Bitcoin block reward when they verify blocks of transactions. To begin with, the reward stood at 50 BTC per block. This would have been worth under a dollar back in 2009 — but at today’s rates (April 28), the price of Bitcoin would’ve gotten you a windfall of around $388,000.

No, this is not the intent of the EIP. As a side effect of a more predictable base fee, EIP-1559 may lead to some reduction in gas prices if we assume that fee predictability means users will overpay for gas less frequently. With EIP-1559, the base fee will increase and decrease by up to 12.5% after blocks are more than 50% full. For example, if a block is 100% full the base fee increases by 12.5%; if it is 50% full the base fee will be the same; if it is 0% full the base fee would decrease by 12.5%.

The ongoing movement of applications to rollups and Layer 2s will be what greatly reduce fees.