TLDR: The EIP-1559 transaction allowed Coinbase and Coinbase users to save ETH on gas prices without confirmation time. Coinbase also burned many ETHs, permanently reducing the supply of the second largest cryptocurrency by market capitalization.
On August 5, 2021, Ethereum’s “London” upgrade was successfully launched on Mainnet as the last hard fork before being converted to Proof-of-Steak / ETH 2.0. The most anticipated upgrade includes significant changes to London Etherium’s monetary policy and transaction fee structure E EIP-1559 যা which has proven beneficial for both Coinbase and ETH holders.
In inheritance transactions prior to London, senders want to set a single gas_price for their transaction and miners will select the transaction based on the first price auction. In London, the price of gas paid by senders is determined by a block-to-block base_free_per_gas, which increases and falls with network usage.
The EIP-1559 transaction allows senders to specify two values: max_fee_per_gas and max_priority_fee_per_gas. The former is a higher limit on the total price of the gas that the sender is willing to pay, while the latter is a higher limit on the price of the gas that the sender is willing to pay in the transaction. Effective_gas_prices, i.e. the amount the sender actually pays, is calculated:
priority_fee_per_gas = min(
transaction.max_fee_per_gas — block.base_fee_per_gas
effective_gas_price = priority_fee_per_gas + block.base_fee_per_gas
The base_fei_per_gas of the block burns, causing the domestic currency to be further printed and the price returned to the ETH holders.
Although there was significant uncertainty surrounding the market impact of EIP-1559, at Coinbase we took an active approach so that our infrastructure was ready to send EIP-1559 transactions on the first day. Based on the work of people like Zsolt Felföldi and Frederik Bolding, we have created a fancy gas pricing algorithm for this transaction. Importantly, it uses the new eth_feeHistory JSON RPC API that allows us to dynamically calculate an appropriate max_priority_fee_per_gas based on market conditions.
We have gradually introduced this change so that we can compare inheritance and EIP-1559 transaction metrics. Our searches were amazing:
- On average, we Effective gas prices have saved about 9% (This was calculated as the difference in guaranteed gas price between the legacy transaction and the EIP-1559 transaction).
- At the same time, we Our broadcast-to-confirmation time has improved by 11 seconds, Or 0.7 block (this was calculated as the broadcast-to-confirmation time difference between the legacy transaction and the EIP-1559 transaction).
E.g. Taylor Monahan is positive, We suspect that we can simultaneously save on gas prices and improve confirmation times because we specify a max_fee_per_gas that is significantly larger than the current base_fee_per_gas. This makes the effective priority_fee_per_gas greater than the equivalent inheritance transaction, encouraging the miner to include our EIP-1559 transaction in the next block.
Coinbase conducts a large number of transactions on Ethereum to provide source liquidity and withdrawals for our customers, so these savings are added. September 2, September 2021, Coinbase 13,800 ETH burned, Almost for the average 254 ETH per day. That means We save about 27 ETH per day Gas price from EIP-1559 transaction. Looking at this data, we have introduced 95% transaction from EIP-1559, saving a small holdback for the purpose of data collection. We finally want to roll it out 100%.
The London upgrade was a significant achievement not only for Ethereum, but for the decentralized financial network as a whole. A diverse group of participants from around the world have come together to implement a complex shift in key mechanisms that determine market value. We look forward to continuing to work with the Ethereum community to move the cutting edge of DApps and DeFi forward and into the new era of ETH 2.0.
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The technical benefits of the EIP-1559 were originally published in the medium on The Coinbase Blog, where people continue the conversation by highlighting and responding to the story.