Last August, the EIP 1559 was deployed on the Ethereum network, during the London hard fork. The latter introduced a mechanism for systematically destroying part of the transaction fees. Now, other networks are exploring the addition of such a mechanism.
EIP 1559: The ETH destroyer
Deployed last August, EIP 1599 introduces a modification to the fee system on Ethereum. Thus, fees are now split into three types:
- The “base fee”: the basic fee to be paid for each transaction;
- The “inclusion fee”: which represents the reward allocated to the miner;
- The “cap fee”: which sets the maximum amount to be spent on a given transaction.
Thus, the base fee is systematically destroyed by the network via the EIP 1559. Since its deployment, the EIP 1559 has definitely destroyed more than 1.5 million ETH.
This phenomenon is such that the emission of ether is even deflationary. Indeed, at certain times, more ETH are destroyed by the EIP 1559 than those created by the mining process. A phenomenon recorded last week that destroyed the equivalent of $350 million in ETH in just seven days.
Unfortunately, despite the expectations of many Internet users, this EIP was not intended to reduce fees on Ethereum. However, it does allow for a more accurate prediction of block fee variations.
Polygon integrates the EIP 1559
At the end of October 2021, the giant Binance announced the deployment of BEP-95 on the Binance Smart Chain. In practice, this development is just an adaptation of the EIP 1559 intended for the BSC.
Binance has also added a mechanism to systematically destroy transaction fees.
Now, it is the Polygon network’s turn to deploy EIP 1559 on its network. On January 17, Polygon’s teams announced the addition of a burn mechanism via an article on the project’s official blog.
“EIP-1559 removes the first-price auction as the primary mechanism for calculating fees. Instead, there is a base fee for transactions to be included in the next block and an inclusion fee to expedite processing. The base fee, which fluctuates based on network congestion, is then burned.”
Like Ethereum, Polygon has deployed this EIP in order to strive for deflationary issuance of the MATIC token. Thus, according to initial estimates, the Polygon network is expected to destroy about 0.27% of the total supply in circulation annually. Good news for holders, which could mean a positive impact on the price of the MATIC token.
The Polygon blockchain is attracting more and more users by offering an ecosystem with lower fees compared to Ethereum. Recently, the Associated Press chose Polygon to issue its NFTs.
