EIP-1559 Fee Structure: Complete Guide

EIP-1559, activated in August 2021 as part of Ethereum's London hard fork, fundamentally changed how gas fees work — introducing a predictable base fee, an optional priority tip, and a mechanism that burns ETH with every transaction.

The Three Components of EIP-1559 Fees

Under EIP-1559, every transaction has three fee parameters. The Base Fee is algorithmically determined by the network targeting 50% full blocks — it increases by up to 12.5% when blocks are 100% full and decreases when blocks are below target. The Max Priority Fee (miner tip) is your optional incentive paid to validators. The Max Fee Per Gas is your absolute ceiling for total gas cost.

EIP-1559 makes ETH transaction fees more predictable and creates a direct link between network usage and ETH supply reduction.

Why the Base Fee Is Burned

A key innovation of EIP-1559 is that the base fee is permanently burned (removed from circulation) rather than paid to miners. This makes ETH a deflationary asset during periods of high network activity. Only the priority fee goes to the validator. This separation reduces the incentive for validators to manipulate gas prices and creates more predictable fees for users.

For a typical transaction submitted under normal conditions, a Max Priority Fee of approximately 2.0 GWEI is sufficient. To calculate a safe Max Fee, a common heuristic is: Max Fee = (2 × Base Fee) + Max Priority Fee. Doubling the base fee ensures the transaction remains competitive through six consecutive 100%-full blocks, protecting against sudden demand spikes.