EIP-1559 Proposal Analysis: A Major Change in Ethereum's Transaction Pricing Mechanism

The EIP-1559 proposal was put forward by members of the Ethereum community in November 2018, aiming to address the transaction pricing issue of the Ethereum network. This proposal made significant adjustments to Ethereum's transaction pricing mechanism, shifting from the original market auction mechanism to a model of base fee plus a tip, while also introducing a dynamically scalable block size design to cope with network congestion.

Under the new mechanism, each block has a fixed base fee, but it will be dynamically adjusted based on network congestion. When the gas consumed by the current block exceeds the target value, the base fee for the next block will increase; conversely, it will decrease. Users can set a maximum for the base fee and tip for each transaction to incentivize miners to prioritize their transactions during network congestion.

For miners, the implementation of EIP-1559 may affect their earnings. In the new proposal, the base fee will be burned rather than paid to miners, who will only receive a fixed block reward and tips paid by users. This means that the mining community may lose a portion of its original transaction fee revenue.

For users and developers, EIP-1559 is expected to significantly improve the user experience. Users no longer need to estimate gas prices when making transactions; they only need to set the maximum amount they are willing to pay. This will effectively address the issues of transaction delays or overpayment caused by inaccurate gas price estimates in the current network, enhancing the usability of the Ethereum network.

From an investor's perspective, the destruction mechanism of the base fee may bring a certain deflationary effect to Ethereum, which is seen by some as a positive factor. However, the factors influencing price trends are complex, and a single factor is difficult to determine the long-term trend.

Overall, the EIP-1559 proposal aims to enhance the usability of the Ethereum network while also impacting the revenue structure of miners. Although the proposal has many technical advantages, its successful implementation remains uncertain due to potential opposition from the mining community. The Ethereum community needs to seek a balance between various interests to ensure the long-term healthy development of the network.