Thread by @hasufl

One of the most common questions we get around EIP-1559 is how predictable the price of getting into the next block will be. Or in other words, how often will you able to pay the current basefee + minimum tip compared to the system degrading to today’s first-price auction (FPA)?

First, a quick excursion: Why do blockchains need to put a price on scarce resources anyway?
1) To maximize user welfare (allocate resources to those who gets the most utility from them)
2) To minimize the social cost txns have on other nodes

To cap the social cost, Ethereum currently puts a hard gas limit of 12.5m on blocks. As of right now, the marginal price of each unit of gas is around 120 Gwei. In other words, at a marginal price of 120 Gwei, there is 12.5m gas worth of demand to transact.

EIP-1559 *effectively* removes the current fixed cap on quantity and instead fixes the price of transacting. That price—the basefee—updates automatically to target the same 12.5m quantity of gas consumed as today.

There is still a hard cap set as 2x the current gas target (so 25m gas), but this cap—called the gas limit, same as today—now only exists to prevent DoS attacks on nodes.

One consequence of this change is that blocks will almost never be full. The only time where this doesn’t hold is when demand to transact at the current price rises very fast to exceed the new maximum of 2 * the gas target (currently 25m gas).

When that happens, the system degrades to the first-price auction we know today. But with every consecutive block mined, basefee will rapidly rise until the point where demand is once again below 25m gas. (Actually, it will keep rising until demand is exacly 12.5m gas)

So this shows it can only happen temporarily at the transition from normal demand -> burst demand. It’s not possible to know how common FPAs will be in the future, but our intuition is “very rare”. Most likely sub 5% of all blocks, and probably more like sub 1%.

This means that 95-99%+ of the time, users will simply be able to pay the quoted price and reliably get their transaction mined in the next block.