Ethereum facing its delusional fees – Vitalik Buterin’s idea to avoid drama

For more than a year, Ethereum has faced a major congestion problem. This has various consequences, the most immediate of which is the drastic increase in transaction costs. Faced with this major problem, Vitalik Buterin, the co-founder of Ethereum, imagined a solution: to modify the fee system once again.

Ethereum victim of its own success

NFT, DeFi, Play to Earn, many have been the phenomena that have emerged on Ethereum in recent years. Unfortunately, these innovations did not only have positive consequences on Ethereum.

Indeed, the increase in the number of users on the network has pushed it into its last entrenchments. Therefore, the resources on Ethereum have become extremely dear. It has now become common practice to spend several tens or even hundreds of dollars to interact with the network.

For example, you have to count between $ 50 and $ 150 to interact with Ethereum at the time of writing. A cost, far from being trivial for most network users.

Average cost of a transfer or interaction with a smart contract on Ethereum – Source: Etherscan.

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A new solution imagined by Vitalik Buterin

On Wednesday January 5, Vitalik Buterin published a proposal for the evolution of Ethereum aimed at reducing network charges, entitled “Multidimentional EIP 1559”.

Thus, this proposal aims to develop the fee system on Ethereum introduced at the beginning of August 2021 with the hard London, through the implementation of EIP 1559.

In practice, the resources of the Ethereum network have different limited capacities depending on the context. Vitalik Buterin identifies two different abilities:

  • Burst Capacity : which corresponds to the capacity that the network can manage over a short period of time (a few blocks);
  • Sustained Capacity : which corresponds to the capacity that the network can manage over the long term.

Unfortunately, in the current fee system these capacities – although different – are managed in the same way by the network.

“The current system, in which all the resources are combined into a single multidimensional resource (‘gas’), does not allow these differences to be managed. “

Vitalik Buterin

Vitalik Buterin and his ideas to manage the cost of the Ethereum network

Thus, Vitalik believes that “The fact of grouping all the resources into a single virtual resource (gas) leads to sub-optimal gas costs. In other words, many transactions have to pay much more for gas than they theoretically should, because the cost of gas is based on a supply and demand mechanism.

To overcome this problem, Vitalik Buterin imagined two solutions each having a different degree of complexity.

  • The first solution aims to keep a fixed execution cost for each of the actions performed on Ethereum. However, a limit on Burst Capacity would be added to the blocks, in addition to the gas limit already present. This would allow a limit to be set on the processing time. The cost of the actions would be calculated there by dividing the total cost of the action by that of the base fee.
  • The second solution, more complex, aims to remove the fixed execution cost for each of the actions and replace it with a more variable cost, depending on the amount of resources actually used. In this case, limits are also added in each of the blocks, both on the Burst Capacity and on the Sustained Capacity. In addition, the gas limit per block would also be removed.

What should be remembered about these two solutions is that they both aim to optimize blocks. Thus, this optimization of the blocks and the actions they contain could lead to a reduction in costs in general.

“At a high level, I think it could lead to significantly lower transaction costs because developers can optimize resource usage much more precisely. It would also allow us to do things like increase the ability to run the EVM while still targeting fixed state growth. “

Karl Floersch, CTO of Optimism, in reaction to Vitalik’s proposal.

These optimizations could well allow Ethereum to continue to evolve while awaiting its passage to Proof of Stake, via Ethereum 2.0. A long-awaited passage by the community, which continues to send massive amounts of ETH on the ETH 2.0 deposit contract in order to take part in the validation process on the new chain.

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