What is EIP-1559?

You might have heard of EIP-1559 which is part of the London hardfork of the Ethereum codebase which is scheduled for August 4, 2021.

In this article, we summarize what you need to know about Ethereum’s upcoming upgrade.

Background

Ethereum in its current iteration is one of the most expensive blockchains to use, and users in recent months have been flocking to Layer 2 solutions or side chains like Polygon and Binance Smart Chain with far lower transaction fees.

Under the current implementation, all operations on Ethereum — for example transferring tokens from one address to another, or staking your tokens on Aave — require gas, which is proportional to the computational energy required to execute the transaction.

Gas is a unit used for measuring the amount of computational effort required to perform specific actions on the Ethereum blockchain.

The more complex the operation to execute by the Ethereum Virtual Machine (the “brain” of the Ethereum network), the more gas required. For example, sending a transaction costs 21,000 units of gas.

By requiring gas for every computation executed on the network, the Ethereum network can prevent malicious actors from spamming the network and bring it down to a halt. It can also help reduce computational waste in the…