Base Fee

Definition ∞ Base fee refers to the minimum amount of gas required for a transaction to be included in a block on certain blockchain networks, notably Ethereum following the EIP-1559 upgrade. This component of the transaction fee adjusts algorithmically based on network congestion, increasing with high block utilization and decreasing with low utilization. The base fee is subsequently burned, removing it from circulation. It operates independently of any priority tip users might include.
Context ∞ The base fee mechanism is a focal point in discussions surrounding Ethereum’s economic model and its transition to a deflationary asset. Its burning mechanism seeks to offset new token issuance and establish a more predictable fee market. A key debate involves the precise impact of this burning on ETH’s supply dynamics and its long-term value proposition. Future developments will monitor how effectively the base fee adapts to varying network loads and its role in maintaining network security and economic stability.