EIP-1559 replaced Ethereum's fee auction with a burned base fee

Inherited archive entry · retained from the earlier edition. Its factual, legal and policy claims have not all been reverified for 19 September 2026. Research scope.

A base fee set by the protocol, not by bidders

Ethereum activated the London upgrade at block 12,965,000, timestamped 5 August 2021 on the public block record, as scheduled in the mainnet announcement. The upgrade's central change was EIP-1559, which replaced Ethereum's first-price gas auction with a base fee that the protocol itself computes. The specification states that this base fee is burned, destroyed rather than paid to whoever produces the block. A user still attaches a separate priority fee, or tip, to compensate the block producer for including the transaction at all.

How the base fee moves

Each block carries a gas target, and the base fee adjusts depending on whether the previous block exceeded or fell short of it. Ethereum's developer documentation, as retrieved on 16 September 2026, describes the base fee as changing 'by up to 12.5% per block', a bounded step rather than an open bid. Blocks may also expand to twice the target size to absorb a demand spike, an elasticity the EIP built in on purpose. That bounded, predictable step is the actual improvement over the previous auction: a wallet can estimate the next block's likely cost from the current base fee within a known range, something a pure first-price auction, where any bidder could jump the price by an arbitrary amount, did not allow.

What burning does and does not do

Burning removes ether from circulating supply with every transaction, which is why the change is often called deflationary. That label is conditional, not automatic: supply only falls when the amount burned exceeds new issuance paid to validators, a balance set by network usage rather than by the EIP itself. Nor does burning lower what a user pays. The base fee still rises when demand for block space is high; EIP-1559 changed how the price is set and who receives it, not whether the price can be high. Predictability is also not the same as low cost: a sudden spike in demand between blocks can still raise the required payment quickly, and the mechanism offers a formula for that movement, not a ceiling on it.

Questions to carry forward

• Is net ether issuance currently positive or negative, and over what measurement period was that assessed?
• Does a fee estimate account for the elastic block-size buffer, or only the steady-state target?
• Who benefits when priority fees rise relative to the base fee, and does that shift incentives around transaction ordering?

EIP-1559 changed the mechanics of paying for Ethereum block space without promising cheaper blocks or a guaranteed contraction in supply. Separating a predictable, burned base fee from a negotiable tip is the durable change; what supply and cost actually do afterward depends on how the network is used.