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What Is EIP-1559?

EIP-1559 is the August 2021 Ethereum fee reform. Instead of a pure first-price auction, each block has a protocol-set base fee that gets burned, and you can add a priority tip to the validator. The base fee goes up when blocks are full and down when they are empty. Wallets estimate both so you are less likely to overpay by 10x during a frenzy.

How It Actually Works

• You still pay gas. 1559 changed the auction, not the fact that block space is scarce.
• Burned base fee reduces ETH supply when usage is high. That is monetary. It is not a coupon on your next swap.
• A max-fee cap keeps you from signing a blank check if the base fee spikes mid-flight. Unused max fee is refunded. The tip is not.

Risks and Common Mistakes

• Reading "ETH is deflationary" as a price promise. Burn versus issuance depends on usage and staking rewards. Some days net supply rises.
• Setting the tip to zero in a busy block and wondering why you are pending. See nonce when you get stuck.

When It Matters

Every Ethereum transaction since 2021, and any "ultrasound money" headline. Blobs later carved out a cheaper data lane for rollups without changing this gas market for ordinary calls.

Related Terms

• Gas
• Token burn
• Blobs

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