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Making Ethereum fee structure reliable and predictable: Multidimensional EIP-1559

Ethereum

TL;DR Breakdown

  • Ethereum co-founder has suggest a new upgrade to the fee management.
  • ‘Multidimensional EIP-1559’ will make the cost of activity on Ethereum blockchain predictable.

Blockchain systems are going through improvements to ensure that the users get the best possible results. The chain of changes has been a continuous process and will continue because of the new user needs and system changes. The more we go forwards, the more there is development in the blockchain systems.

Ethereum is one of the leading names in blockchain systems that constantly works on structural updates to ensure smooth progress. There have been various suggestions and improvements based on these suggestions in the past. In short, it is the result of the collective effort that Ethereum blockchain is ranking on this level.

Here is a brief overview of Buterin’s suggestion, how it can impact the current system, and any change expected in the Ethereum blockchain fee system.

Vitalik Buterin’s suggestion

Vitalik Buterin is a leading name in blockchain tech as he was one of the founding names in the development of the Ethereum blockchain system. Since its inception, he has been associated with Ethereum and has a significant role in its development.

The current suggestion came from Buterin due to possible improvements in the Ethereum blockchain. He closely follows the Ethereum system and knows the intricacies of potential improvements.

The new improvement that Buterin has suggested is a continuation of the current one, i.e., one that is in use, EIP-1559. The recent suggestion has been named ‘Multidimensional EIP-1559.’ As the name suggests, this update is an up-gradation of the previous update. The mentioned suggestion is about the fee structure in the system.

As all of us know, every transaction on the Ethereum system works using the fee in the form of ‘gas.’ There are some technical calculations and formulas that can be used to calculate the fee. If there is some improvement in the procedure, there can be an improvement in the costs of the process as well.

Gas is not only used for transactions but also for other activities of the system. An example of ‘gas’ in transactions is that in usual cases, ‘transaction data’ spend only 3% of gas in a block. If the case worsens and the expenditure increases, it might even go to 67 times that of everyday use.

If we compare the two, we will get an average in ideal cases, but that doesn’t happen in actuality. In actual circumstances, the fee is much higher than the perfect calculations. The new suggestion from Buterin will make the gas fees more predictable. The latest upgrade lowers gas costs, and users would save costs.

The ways of realization for this suggestion

There are two possibilities to realize the suggestion from Vitalik Buterin. The first one is about the ‘fixation of gas cost’ while the other is the ‘fixed base fee.’

In the first case, if we want to ensure that the transaction fee and other activity on Ethereum are predictable, the execution cost will have to stay fixed. Once this amount is selected, there will be the question of operating expenses. These costs will be calculated by using the resource used and dividing it by the base fee.

In the second case, the option allows the user to calculate a fixed fee while the block gas fee depends on the type of activity. Thus, the process of calculation of costs is simplified. If the fee is set for the users, it will also enhance the system’s security.

Final Thoughts

Vitalik Buterin has been the leading name in developing the Ethereum system. His new suggestion named ‘Multidimensional EIP-1559’ will help predict the fee calculation process. Once this is calculated correctly, the process for any activity will simplify and become better secured. 

Muhammad Ali

Muhammad Ali

Muhammad Ali is an expert on crypto investments. Loving to write about fintech, he joins the team to provide detailed analyses of the hottest crypto news.

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