EIP-1559 burns the base fee and restructures Ethereum's economic relationship with its own issuance

AUG 05 2021 · 12:05

Video: Can ETH Become DEFLATIONARY? EIP 1559 Explained Date: 2021-08-05 · Type: ethereum · Tags: eip-1559, fee-mechanism, burn, miners, london, ethereum, 2021 Miners organized to stop it. They failed. 1.3 million ETH burned in six months. The London hard fork activated at block 12,965,000 on August 5 2021, implementing EIP-1559 — a fee mechanism redesigned over multiple years by Tim Beiko, Eric Conner, Vitalik Buterin, and others. The mechanism replaced the simple first-price auction for block space with a protocol-set base fee, which was burned rather than paid to miners, plus an optional priority tip. The result was more predictable fees for users and, crucially, a deflationary pressure on ETH supply: when demand was high enough, more ETH was burned than minted. The miner blowback was real. PoolIn (Spark Pool's parent, then the world's largest Ethereum mining pool) organized a showing of force in April–May 2021, briefly mining their own blocks without 1559-compliant transactions to demonstrate their veto power. The gesture had no effect on the upgrade timeline. This was partly because The Merge — the transition to proof-of-stake that would eliminate miner revenue entirely — was already clearly on the roadmap, making miner opposition structurally doomed. EIP-1559 also produced 'ultrasound money' as a narrative frame: the argument that Ethereum, post-1559 and post-Merge, would have negative net issuance during high-demand periods, making it a harder asset than Bitcoin's fixed-supply model. Whether that framing is economically rigorous is a live debate. What is not debatable is the mechanism: by 2022 Ethereum's net issuance had gone negative for sustained stretches, and the cumulative burn by 2026 had exceeded several million ETH. Facts • Activation: August 5 2021, block 12,965,000, ~12:33 UTC • EIPs in London upgrade: 1559, 3198, 3529, 3541, 3554 • ETH burned in first six months post-activation: ~1.3M ETH (~$5B at prevailing price) • PoolIn/Sparkpool organized miner 'show of force' in April–May 2021; had no effect • Base fee mechanism: set by protocol, burned; tip: optional, paid to validator • Provided foundation for 'ultrasound money' issuance narrative Primary Documents • EIP-1559 specification — https://eips.ethereum.org/EIPS/eip-1559 • EF Blog: London Mainnet Announcement (July 2021) — https://blog.ethereum.org/2021/07/15/london-mainnet-announcement