Fee Markets

With the goal of further improving the user experience, Ethereum's fee market was overhauled with the EIP-1559 upgrade, replacing the first price auction system (highest bidder wins) with a system that encompasses the following:

• Base fee: Algorithmically determined by the protocol itself, base fees represent the minimum fee for your transaction to be considered valid, and are burned upon inclusion.
• Priority Fee (Tip): Users can optionally add a tip to incentivize validators to prioritize their transactions. This is especially relevant when the network is busy since block space is limited, or when a contentious state change exists.

Whilst EIP-1559 attempted to improve the accuracy and predictability of Ethereum transaction fees, the capacity constraints of blockspace mean rank and inclusion latency remain dependant on tips users pay.

For this reason, price discovery for blockspace remains inefficient...