EIPs or Ethereum Improvement Proposals are a set of technical standards (protocol specifications, contract standards, client APIs etc.) for the Ethereum blockchain. EIP-1559 is a proposal to make Ethereum transactions more efficient and to evenly incentivize miners in periods of high and low network congestion. Currently, Ethereum uses an auction system wherein the more gas fees you pay, the more likely a miner will include your transaction in an upcoming block.
Learn more: Why is my ETH transaction fee so high?
By switching from the current system to EIP-1559, users could have a stable transaction costs. experience
With EIP-1559, when there is increased network congestion, the base fee would rise and users who paid tips would have their transactions processed first. Once all the urgent transactions are cleared, non-urgent transactions would be executed as the base fee decreases.
Users would not have to wait more than a few blocks for their transaction to be processed. Your Ethereum transaction would be confirmed in less than a minute.
In the previous Gas fee settings, there is a Gas Price (Gwei) and Gas Limit setting.
The amount of Ether (Gwei) that must be paid to miners for processing transactions on the network.
Maximum amount of gas (or computational effort) that is required to process your transaction.
Moving forward, there will now be a Base Fee which is automatically set. And a Miner Tip (Gwei) and a Max Fee (Gwei) that can be manually configured in the Advanced fee settings.
The Base Fee is a mandatory and algorithmically determined fee that would be paid in Ether and fluctuate according to network congestion. If network usage exceeds 50% capacity, the Base Fee automatically increases. If network usage falls below 50% capacity, the base fee decreases slightly. Also, base fees would be burned to reduce the circulating supply of Ether.
A Miner Tip can be placed on top of the Base Fee in order to incentivize miners in prioritizing a transaction. This Miner Fee will directly go to the miners. If there is no network congestion, a small tip would be enough to guarantee that a transaction would be included in the next few blocks.
The Max Fee is the absolute maximum amount you are willing to pay per unit of gas to get your transaction confirmed.
A Definitive Guide to Ethereum EIP-1559