Upgrade the Ethereum chain EIP-1559 behaves sometimes unexpectedly
According to an analysis by the Huobi Research Institute, the EIP-1559 upgrade of the Ethereum network implemented in August does not always behave as expected. The market researchers see surprising deviations in four points.
As part of a report, the Huobi Research Institute dealt with the effects of the EIP-1559 upgrade, which went live on the Ethereum chain together with the “London” update. According to the report, the upgrade caused four phenomena that are not always as expected.
Fees not significantly reduced
As a first point, the Huobi Institute names the transaction fees that have not fallen significantly. On the contrary, when viewed in US dollars, they have risen up to a certain point in time, which the market researchers attribute to the rise in ETH prices. The changes to the gas process introduced by EIP-1559 also had little effect on the level of prices in Gwei. The reason for this, according to the experts, is that EIP-1559 should generally ensure higher efficiency rather than lower fees.
The Huobi Institute also sees a significant increase in daily gas consumption since the “London” fork and concludes that block capacity has increased by around ten percent. Transaction overload problems have been alleviated to a certain extent. Market researchers attribute this to the variable block size design introduced with EIP-1559. Overall, this increased the block utilization rate from 50 percent to 51.7 percent.
Inflation slows down, revenues steady
EIP-1559 also feared that it would have a deflationary effect on Ethereum. According to the Huobi Institute, this has not been confirmed. Instead, only the existing inflation was moderated somewhat. This effect has so far not been able to initiate deflation.
As a fourth effect, the experts report that after the “London” fork there were no significant losses in terms of mining earnings. Previously, it was expected by many observers that EIP-1559 would reduce miners’ income. This has not been confirmed; on the contrary, when viewed in US dollars, an increase in miner’s earnings was even registered. On the basis of ETH, only a slight decrease is visible. The Huobi Institute cites a possible reason for this that more than 80 percent of the transactions in the current block are processed in the original legacy mode. The EIP-1559 mode, on the other hand, only accounts for around 20 percent.