[Signal Request] Does MakerDAO support EIP-1559?

Simple Summary of the EIP
“A transaction pricing mechanism that includes fixed-per-block network fee that is burned and dynamically expands/contracts block sizes to deal with transient congestion” (Source)

The concept was initially proposed in 2018 by Vitalik Buterin (Source), and first formalized as an EIP by Eric Conner. Since then, it has been implemented in 4 clients, subjected to expert academic review, and is currently in the testnet proving phase. See here for an up-to-date list of resources maintained by Tim Beiko.

Why is signaling needed for something external to MakerDAO?
It is useful to measure community sentiment, especially when it will have varying impacts on Ethereum stakeholder groups; this includes the application layer. We are also reaching out to many other leading applications and tools, and will present our findings at the upcoming 1559 community panel on Feb 26th. Our results would be incomplete without the MakerDAO community’s position represented.

Client teams are far enough along in implementation and testing that a network upgrade potentially including 1559 has been tentatively scheduled for July 2021. In the unlikely event of a contentious chainsplit, MakerDAO would have to choose which chains to maintain the DAI system on. Clear, early signals from leading applications regarding their preferred featureset (eg. the chain that implements 1559 or not) will help to decrease uncertainty for the entire ecosystem leading to the upgrade.

While there is no exact precedent for this type of direct survey, given the scope of the change, we thought it important that application communities become familiar with the mechanisms that make 1559 work. It is not expected that explicit polling for EIPs will become common in the future.

Expected Benefits

  • More predictable gas fees, reducing user overpayment
    • “Shopping on Amazon is a lot easier than buying a house in a competitive real estate market. On Amazon, there’s no need to be strategic or second-guess yourself; you’re either willing to pay the listed price for the listed product, or you’re not” (Section 4.2)
    • This will lead to better UX for users and applications
  • Preventative maintenance to avoid possible future chain reorgs
    • In conditions where fees significantly outweigh block rewards, there is an ever present incentive for block producers to carry out short term reorgs to capture as much value as possible. Burning the BASE_FEE removes this latent incentive.
    • Read more here: On the Instability of Bitcoin Without the Block Reward
  • Cements the role of ETH within the Ethereum crypto-economic system
    • Burning the BASE_FEE adds a real and consistent cost to economic abstraction (paying for transactions out-of-band, or “off-chain”, in non-ETH assets)
  • Will allow in-protocol congestion oracle
    • Once EIP-1559 is live, it will enable a native congestion oracle via EIP 3198 - A useful tool for applications

Possible Downsides

  • Technical complexity
    • Reforming the fee market for a live, value bearing chain like Ethereum is no small task. All client level issues aimed to de-risk it are tracked here.
  • Miners are largely opposed to it, and are threatening to make the upgrade contentious
    • The BASE_FEE burn, an integral part of the system, has led to miner opposition because it will reduce their income.


  • Lowering individual transaction fees
    • Transaction fees are a function of supply and demand, and this EIP does not attempt to increase average available blockspace or alternatively, reduce demand.
  • BASE_FEE burning is meant to punish miners
    • Burning the BASE_FEE is the simplest mechanism to ensure the elastic blocksize is not gamed by miners. If not burnt, then miners could costlessly increase the blocksize while extracting maximum BASE_FEEs from users, and recoup their sent losses.
  • Increasing ETH price
    • While sometimes mentioned by proponents of this EIP, this is not a stated goal for any of the constituent mechanisms.

Thanks to the MakerDAO community for their consideration, we are looking forward to questions and discussion!

MakerDAO supports EIP-1559
  • Yes
  • No
  • Abstain

0 voters

This poll will continue until Thursday 25th February and move on-chain on the following Monday, regardless of the off-chain signal outcome. This is so we can see MKR Holder response in addition to the community response.


Thanks for outlining the situation and bringing this to MakerDAO. One note:

Would you clarify if the outcome of this signal will be including in an official statement from you/others or that you are asking for an official statement from MakerDAO?

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Good call, I missed that. The outcome of this poll and the following on-chain poll will be something @tvanepps (or anyone else) can point at in a twitter post or blog post. MakerDAO doesn’t tend to offer official statements in this way, there is no official MakerDAO (as opposed to Maker Foundation) twitter account.


Hi there,

1559 champion here :wave:

That’s fine, we can point to an on-chain or off-chain vote as the “signal”. If the Maker Foundation wants to share it on social media/blogs, that’s even better, but if there is a policy against doing this, no worries.


I’ve been mining ethereum since 2017 and just broke even on my investment three weeks ago. This has taken a considerable amount of work and dedication. I am exactly the kind of miner we need on the ethereum chain, and this threatens to wipe out my years of work to finally make a profit. I don’t personally support this EIP and I think the community is downplaying the importance of miners and the security/decentralization they provide for the network.

Aside from that, I am concerned that burning the base fee will lead to ETH deflation; which is great for the token, but as the price of ETH increases the cost of transactions for our users increases (so long as demand stays the same or increases). For those in support of this EIP, I would be interested in your take.


I’ve removed this request.

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Ethereum would be best served to stop tinkering with monetary policy if it wants anyone to take it seriously. IMO it adds needless complexity to reasoning about fees, the fee market is already a barrier to onboarding new users, so adding two fee components just increases the cognitive overhead.

That said, I personally fully support whatever decision the core Ethereum developers choose on this. Professionally, the EIP itself has only tangential effects on MakerDAO’s operations, and is probably good for our risk model if our primary collateral type becomes deflationary.


I am for anything that smoothes out the transaction fee and provides some predictability on the pricing.


While not part of the poll, I am for EIP-1559… BUT after the PoS “merge” is complete (so in X months) … in my eyes, adding friction with miners until the merge is just not needed (and is playing w/ fire).

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To be clear, the TIP would be set in almost all cases to a default value behind the scenes by wallets. Unless there is a sudden spike in demand, most users would have a single value to set, and would likely have their transaction included quicker than under the current regime.


I eth price moons further, i promise i will act antideflationary.

This is weird logic. If the cost of transactions increase then, eventually, demand will decrease. I don’t see how EIP 1559 affects transaction costs. Transactions costs are purely a function of demand for transactions.

Moving low value traffic to level-2 is the way to reduce level-1 congestion.

Well that is in theory what this is supposed to help, as many folks over-bid to get into a block… and when everyone over-bids, then the average fee excess is just economic waste… (my understanding…)

I got into crypto by mining. First mined Monero chains with my gaming computer, then bought extremely overpriced GPUs and built a 5-GPU rig for ETH. I mined ALLLLL the way down through the depths of the bear market (at a hefty loss), and through DeFi summer until my cards got bricked by the 4GB DAG file increase. Held all my ETH and about doubled my expenses + electricity. IMO, miners are getting overpaid right now, and I’m welcoming the burning.


Yeah, obviously cmooney did not have best strategy. Most miners should not be profitable, otherwise we are significantly overpaying.

It was against against my better judgement, but I polled for “Yes.” Reason: I hope and pray it will increase block size by 2x. However, I do think that miners will make this a worrisome and stressful experience for the Ethereum community which will lead to bad press. I also remember coming across this reddit post last month, which made me realize the miners point of view–not All miners are making a killing:

Just to clarify, 2x block gas limit increases (under the “elastic blocksize” feature) are only temporary to accommodate demand spikes. They are balanced out by 1/2x blocks (~6.25mm gas) so as to not increase rate of state growth. Over long periods, average available blockspace will remain the same as before 1559.

Regarding miners, while we have to consider the needs of every stakeholder group in protocol changes, we cannot let the needs of a single subset overly encumber the greater benefit of the entire ecosystem.

not All miners are making a killing

This is the equilibrium state of the mining network - when the mining ecosystem is saturated at scale, most miners will be just above breakeven profitable. If it were any higher, hashrate would join the network, attracted by the profits and increase the overall mining difficulty.

Adrian Sutton had a great piece recently addressing this point, would encourage you to read it: Why Miners Can Be Simultaneously Paid Too Much and Struggling to Survive


Which is exactly what EIP-1559 is designed to fix. Fees should come down to match actual demand.


I think it’s a good idea for Maker to signal in support of eip1559. Adjusting the fee mechanism may help reduce risk of disorderly liquidations - it makes it prohibitively expensive for miners (or others) to corner the fee market, and offers extra block space supply elasticity during spikes in demand.


I think @cmooney raise an excellent point. The miners we need are priced out. But this is not related at all to EIP-1559.

My understanding is limited but the fees from minting are fixed in ETH while those from fees are more volatile. But you can expect a baseline of fees over a long period. Today or soon, you can probably hedge the ETH price just like the McChicken & Ray Dalio.

Whatever the fees are (minting + average gas costs), the mining process is a commodity. It means the largest miners (buying power) with the lowest energy costs increase capacity until it’s no longer profitable for them. Which is already unprofitable for 98% of the small competitors. You can double the average gas costs or burn all of it, the equation works exactly the same. EIP-1559 will remove some hash power but the increase of ETH price will add some as well.

PoW is by design leading to mining concentration. This seems to be a serious problem that is not addressed (not sure I never thought about that before). Not sure PoS will change much.

EIP-1559 is important to surf on the deflation narrative that will help to put ETH as a store of value in the eyes of the public until we solve scalability issues. And with PoS it would be good to kill BTC that is an environmental nightmare.

PS: I have a feeling that TIP will be used almost all the time.

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