Filecoin Looks to Mitigate Ethereum Fees with EIP-1559
Decentralized file storage firm Filecoin is testing a long-awaited Ethereum Improvement Proposal (EIP) on its network. It aims to counteract the high network fees on the industry’s current market leader Ethereum.
Filecoin Testnets Show Positive Results
The EIP-1559 is a long-awaited implementation that wants to tackle the ill-effects of high Ethereum fees, which renders dApps and on-chain trading strategies out of reach for a retail user.
The proposal had been first suggested in April 2019. And with the high fees issues in the current months, the proposal is in focus again. It has even attracted the likes of Ethereum co-founder Vitalik Buterin, who tweeted this week:
A proposal to change Ethereum’s fee structure has been in the pipeline since first being suggested in April 2019. A surge in network fees in recent months has brought the spotlight back on to EIP 1559, and it is being trialed on the digital storage platform Filecoin.
Filecoin engineer Jeromy Johnson noted the EIP code “appears to be doing its job” based on the results of an ongoing test on the Filecoin network. He added a couple of price “spikes” have been observed in the testnet’s “base fee,” but that there was a “little” delay in messages sent to the chain.
Two Ethereum clients are currently testing the code on the private testnet. These are Vulcanize’s geth fork and Besu.
For the uninitiated, the EIP-1559 introduces a new “base fee” mechanism that automatically adjusts fees based on the network’s congestion levels. Currently, Ethereum network fees are calculated in an auction-type system where users “bid” their prices, meaning miners naturally are incentivized to take the higher bid.
But the new proposal changes that. It introduced a dynamic method that states if more than half of the blockchain is utilized, then the base fee increases and vice-versa. This, in theory, and now in tests, would allow Ethereum users to “jump the queue” by paying a “tip” on top of the base fee.
The maximum difference in base fee from block to block would then be predictable because these increments are constrained. This would then allow wallets and dApps to automatically set the gas fees for users more reliably rather than simply estimate them.
But don’t expect the EIP 1559 to roll out on the Ethereum mainnet just yet. It will take a minimum of 6-12 months to be implemented, as per ETHhub founder Anthony Sassano.