From 368c7c158f09fc36ddc13b80f65928af63bfe365 Mon Sep 17 00:00:00 2001 From: bt3gl <1130416+bt3gl@users.noreply.github.com> Date: Mon, 19 Sep 2022 02:33:32 -0700 Subject: [PATCH] Create EIP-1559.md --- MEV/EIP-1559.md | 18 ++++++++++++++++++ 1 file changed, 18 insertions(+) create mode 100644 MEV/EIP-1559.md diff --git a/MEV/EIP-1559.md b/MEV/EIP-1559.md new file mode 100644 index 0000000..de149e9 --- /dev/null +++ b/MEV/EIP-1559.md @@ -0,0 +1,18 @@ +## MEV and EIP-1559 + +
+ +- The incorporation of EIP-1559 in the London hardfork brought a major restructuring of the Ethereum fee mechanism, aiming to allow for easier +fee estimation by users and consolidate ETH as the base currency of the network by burning part of the transaction fees. + +- Under the new fee mechanism, instead of choosing a gas price for their transactions, users set a "priority fee" for miners to incentivize inclusion, +alongside a "max fee", stating the absolute maximum price that they are willing to pay. The protocol now sets a per-block "basefee", computed +programmatically from the amount of gas used in the block immediately before, in a negative feedback loop meant for block sizes to stabilize +around a target size $s_0$ (initially equal to the maximum current block size). + +- Valid transactions pay a gas price equal to the basefee plus the +prioirity fee (only up to the max fee needed in case of sudden basefee increases). The prioirity fee goes to the miner, and, crucially, +the basefee is burnt. + +- Implications for MEV-related infrastructure: eliminate the possibility of zero-Gwei transactions, which are presently used for front-running +protection in some DEXes like MistX, where miner fees are taken directly from the transferred tokens.