New Ethereum Fee Model Upgrade Should Be Launched In 2021

A new ethereum fee model upgrade should be launched later this year because the high gas prices are really a huge issue for the ETH community. The issue gained widespread coverage in the summer of Defi once the demand increased along with the network usage and resulted in harsher changes so let’s read more in today’s ethereum news.

The Ethereum improvement proposal 1559 is seen as the solution to the problem but it was really clear whether it will be launched. However, the new Ethereum fee model upgrade could be coming up this year according to the reports by the developer team. The amazing week for ETH sees a huge price recovery which led the coin to a new all-time high that was previously reached in 2018. Despite not closing the daily above this level, the momentum is still with the leading altcoin. For example, Ethereum’s daily volume of transactions is about 30% higher than the BTC network and as a further indication of topping the market leader, the pair increased by 11% and made a new all-time high against the dollar.

Ethereum's daily transaction volume is going parabolic.

It now settles $12 billion in transactions daily – $3 billion more than Bitcoin.

Imagine not being bullish $ETH. pic.twitter.com/3NfOz1ruiM

— Ryan Watkins (@RyanWatkins_) January 19, 2021

With the next milestone target, the ETH 2.0 Phase 1 scaling through shards will be rolled out this year but the rising price of ETH resulted in surging gas fees for three weeks and the use of Tether on TRON even surpassed Ethereum. As such, the issue with the high gas fees is making the presence drop again. The higher gas fees are something that the ETH team is aware of but the EIP 1559 proposal was first floated back in June 2018. The latest update by Danny Ryan, the ETH Core developer, stated that he is actively working on the new solution and it will be ready to be rolled out this year:

 “R&D on this item has picked up steam in the past 12 months, and we optimistically will see 1559 fee mechanics on mainnet in 2021.”

EIP 1559 does two things: establishing a “market rate” for block inclusion and also introducing a transaction fee burn mechanism. The current structure works like an auction system as the users submit gas price bids to get the transactions executed by a miner but the miners tend to select transactions that will result in earning a higher fee. With the new proposal, a variable fee structure comes into play and we can expect a move higher or lower according to how heavily the network is congested. Instead of a system that is filled with users that tend to overpay, EIP 1559 established a market rate for gas fees.