Thread by @domothy

This is obvious for a lot of people but still:

If EIP1559's goal was just to take advantage of the high gas fees to burn a lot of ETH, they would have just increased the gas limit to lower fees but still burn way more ETH through the increased volume from the induced demand.

e.g. The market is okay with paying 50 gwei when there's a supply of 15 million gas per block.

If we 10x gas supply, fees should go down to 5 gwei.

But there's a lot of people willing to pay those lower fees so the increased volume would bring them back up to maybe 15-20 gwei.

A low gas limit actually hinders protocol revenue

50 gwei/gas × 15m gas/block = 0.75 ETH burned per block – net +1.25 ETH/block, still inflationary supply.☹️

15 gwei/gas × 150m gas/block = 2.25 ETH burned per block – #ultrasound money deflationary at -0.25 ETH/block! 🦇🔊

"But still, low fees good. Why *don't* we 10x the gas limit?"

Because higher gas limit = even faster blockchain bloat = even harsher hardware requirements = fewer nodes = less decentralization.

It'd basically be a lazy shortcut that sacrifices decentralization for more burn.

Lastly, some benefits of EIP1559 briefly summed up:

https://twitter.com/domothy/status/1468276976607805441