Vitalik Buterin Proposes Ethereum’s Fee Structure Improvement

Ethereum co-founder Vitalik Buterin has proposed “Multidimensional EIP-1559” for improving the current fee structure of the Ethereum network. Learn more.

Ethereum co-founder Vitalik Buterin has proposed “Multidimensional EIP-1559” for improving the current fee structure of the Ethereum network. In a blog post, he has said that in terms of gas usage different resources in the EVM (Ethereum Virtual Machine) have different usages. Buterin said that there are mainly two kinds of EVM needs. While one is the short-term burst capacity, the other is the sustained capacity within the EVM. He cited examples of block state size changes, witness data storage, and block data storage. 

Vitalik Buterin admitted that:

“The scheme we have today, where all resources are combined together into a single multidimensional resource (‘gas’), does a poor job at handling these differences.”

He went on to explain that when limits are misaligned, channeling different resources in a single multidimensional resource or gas leads to “very sub-optimal gas costs”. To solve this issue, Butherin proposed two potential solutions through the use of “multidimensional” pricing. 

  1. The first option involves the calculation of gas cost for resources like call data and storage. Here, the base fee for each resource unit is divided by the total base fee. The base fee is a network fee that is fixed per block. This fee is included in the Ethereum Improvement Proposal (EIP) 1559 algorithm.

  1. The second option is more complex. It involves setting a base fee to use resources. However, on each resource, there are burst limits. In this option, “priority fees” are involved. Priority fees are a percentage and the calculation is done through the multiplication of the percentage by the base fee. 

Vitalik is also aware of a drawback of the multidimensional fee structure. He has already mentioned it in his blog post. While explaining the drawback of the multidimensional fee structure he said that “block builders would not be able to simply accept transactions in high-to-low order of fee-per-gas.”  In that case, they’ve to balance the dimensions and at the same time solve mathematical problems additionally. 

As the priority currently is the next big upgrade of the Ethereum network (which is “the merge” stage of development), it remains to be seen whether the proposal gets passed. The merge stage of development will effectively end the proof of work (PoW) consensus algorithm and usher in the proof of stake (PoS) consensus algorithm. Testing of the merge developmental stage has already started on the Kintsugi testnet. Its full deployment is expected to happen in Q1 2022.