What is EIP-1559?

Where does the ETH you pay go when you make a transaction on Ethereum?

EIP stands for Ethereum Improvement Proposal. Proposal 1559 changed how fees are calculated and distributed. Think of a delivery service with a base rate that adjusts to demand, plus an extra amount for priority.

Every transaction consumes gas, i.e. units of computational work. With EIP-1559, the price per unit of gas has two parts: the base fee, which the protocol itself calculates, and the priority fee (or tip), which goes to the validator that includes the transaction in a block.

The base fee rises when usage of previous blocks exceeds the protocol’s target and falls when it’s below it. Blocks can temporarily fit more work than this target, so they can absorb spikes in demand. The ETH paid as the base fee is burned, i.e. permanently removed from the supply. It doesn’t go into any Ethereum treasury.

Why it matters

For anyone sending ETH or using an app on Ethereum, EIP-1559 makes fee estimates more predictable. Your wallet can suggest a fee based on network conditions, instead of you having to constantly guess how much to offer.

At the same time, the burn links network usage to the ETH supply. We find this link useful, but burning on its own doesn’t guarantee a drop in total supply: we also need to factor in the new ETH being issued.

What to watch out for

EIP-1559 doesn’t guarantee cheap transactions. When many people compete for block space, the base fee can rise considerably. Also, a higher tip doesn’t guarantee immediate execution.

The max fee per gas you set isn’t necessarily what you end up paying. The actual fee depends on the gas consumed, the base fee and the tip. If your limit doesn’t cover the base fee, the transaction may stay pending.