Vitalik Buterin Proposes New Fee Structure For Ethereum

Vitalik Buterin Proposes New Fee Structure For Ethereum

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Ethereum co-founder Vitalik Buterin has put forward a new proposal that could affect and improve Ethereum’s current fee structure. The proposal, titled multidimensional EIP-1559, was detailed in a blog post shared by Buterin.

The Multidimensional EIP-1559 Update 

Buterin’s proposal was published in a blog post on 5th January. In the post, Buterin acknowledged that different resources in the Ethereum Virtual Machine have different gas demands when it comes to usage. The post listed two options for what Buterin calls the “multidimensional EIP-1559” while discussing Ethereum’s gas fee market. 

He referred to the usage of the Ethereum Virtual Machine, witness data, block data, and state size filling, pointing out that these different resources are bundled into a single multidimensional resource. Buterin stated that the current system is unable to handle the differences in limits for resources in the EVM.

The Current Problem And Solution 

Buterin stated that trying to bring together different resources into one results in sub-optimal gas costs when limits are misaligned. Buterin’s solution, while very complicated and technical, basically offers two potential solutions, both of which utilize multidimensional pricing. 

“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.”

Buterin’s first option involves calculating the gas cost for different resources such as storage and call data. This approach works by dividing each unit’s base fee with the total base fee required. The base fee is already included in the EIP-1559 algorithm as a fixed-per-block network fee. 

Buterin’s second solution is more complicated, setting a base fee on the utilization of resources while also including a “burst limit” on resources. It also includes priority fees which would be set as a percentage. These priority fees are calculated by multiplying the base fee and the percentage. According to Buterin, the multidimensional fee structure does have its set of drawbacks, as block builders will not be able to accept transactions in the usual order of high-to-low order. 

Implementation Some Way Off 

While the proposal by Buterin has been made, it remains to be seen when it would be implemented, with Ethereum currently working on “the merge,” which will see Ethereum mark the end of Proof-of-Work once the Ethereum blockchain merges with the Beacon Chain. Currently, testing is taking place on the Kintsugi testnet, with complete deployment expected in the first quarter of 2022. 

Buterin had appeared on the Bankless podcast earlier in the week, talking about a host of topics. He also gave an update on the progress of Ethereum, 2.0, sharing a detailed roadmap.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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