Definition ∞ The EIP-1559 upgrade represents a significant modification to Ethereum’s transaction fee mechanism. This change introduced a base fee for each transaction, which is then burned, and an optional priority fee for faster processing. It aimed to make transaction costs more predictable and reduce the overall supply of Ether. This upgrade fundamentally altered how users pay for and how miners receive compensation for processing transactions on the network.
Context ∞ The EIP-1559 upgrade remains a key discussion point regarding Ethereum’s economic model and its impact on network participants. Debates often center on its effectiveness in managing gas fee volatility and its deflationary pressure on Ether. Future developments involve observing its long-term effects on network security, transaction efficiency, and the broader Ethereum ecosystem as it continues to scale.
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