Crypto glossary
EIP-1559
EIP-1559 is the Ethereum fee reform, live since August 2021, that added a protocol-set base fee, which is burned, plus an optional tip for validators.
Before EIP-1559, Ethereum users bid for block space in a simple auction, which made fees hard to predict. The proposal introduced a base fee per unit of gas that the protocol adjusts from block to block: it rises when blocks are more than half full and falls when they are emptier. Users add a priority fee, or tip, to be included faster.
The change went live with the London upgrade in August 2021. Its most visible effect is that the base fee is burned instead of being paid to block producers, permanently removing ETH from circulation. In busy periods the burn can exceed new issuance, which is why ETH's supply shrank at times after The Merge.
EIP-1559 made fee estimation easier for wallets but did not make transactions cheaper; fees still depend on demand for block space. The burn also ties ETH's supply to activity on the main chain, so when usage moves to layer 2 networks, less ETH is burned.
Example
If the base fee is 20 gwei and a user adds a 2 gwei tip, a simple 21,000-gas transfer costs 0.000462 ETH, of which 0.00042 ETH is burned.
