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

TL;DR

This paper empirically evaluates EIP-1559 on Ethereum, showing it improves user experience by reducing waiting times and intrablock fee differences, with limited impact on fee levels and security, and highlights effects of Ether volatility and block size.

Contribution

It provides the first comprehensive empirical analysis of EIP-1559's impact on transaction fees, waiting times, and security using real blockchain data.

Findings

EIP-1559 reduces transaction waiting times.

It mitigates intrablock fee disparities.

Limited effect on overall fee levels and security.

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.