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Empirical Analysis of EIP-1559: Transaction Fees, Waiting Time, and Consensus Security

Author

Listed:
  • Yulin Liu
  • Yuxuan Lu
  • Kartik Nayak
  • Fan Zhang
  • Luyao Zhang
  • Yinhong Zhao

Abstract

A transaction fee mechanism (TFM) is an essential component of a blockchain protocol. However, a systematic evaluation of the real-world impact of TFMs is still absent. Using rich data from the Ethereum blockchain, the mempool, and exchanges, we study the effect of EIP-1559, one of the earliest-deployed TFMs that depart from the traditional first-price auction paradigm. We conduct a rigorous and comprehensive empirical study to examine its causal effect on blockchain transaction fee dynamics, transaction waiting times, and consensus security. Our results show that EIP-1559 improves the user experience by mitigating intrablock differences in the gas price paid and reducing users' waiting times. However, EIP-1559 has only a small effect on gas fee levels and consensus security. In addition, we find that when Ether's price is more volatile, the waiting time is significantly higher. We also verify that a larger block size increases the presence of siblings. These findings suggest new directions for improving TFMs.

Suggested Citation

  • Yulin Liu & Yuxuan Lu & Kartik Nayak & Fan Zhang & Luyao Zhang & Yinhong Zhao, 2022. "Empirical Analysis of EIP-1559: Transaction Fees, Waiting Time, and Consensus Security," Papers 2201.05574, arXiv.org, revised Apr 2023.
    • Handle: RePEc:arx:papers:2201.05574
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    References listed on IDEAS

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    Cited by:

    1. Conall Butler & Martin Crane, 2023. "Blockchain Transaction Fee Forecasting: A Comparison of Machine Learning Methods," Mathematics, MDPI, vol. 11(9), pages 1-26, May.
    2. Jens Leth Hougaard & Mohsen Pourpouneh, 2022. "Farsighted Miners under Transaction Fee Mechanism EIP1559," IFRO Working Paper 2022/04, University of Copenhagen, Department of Food and Resource Economics, revised Dec 2022.

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