This series will provide answers to the list of Solidity interview questions that were published by RareSkills.
Prior to EIP-1559, the dollar cost calculation of an Ethereum transaction was
((GAS USED * GAS PRICE / 10^-9) * CURRENT ETHER PRICE
In this era, the miner received 100% of the gas cost.
After EIP-1559, the dollar cost calculation of an Ethereum transaction is
(((BASEFEE + PRIORITY FEE) * GAS USED)) / 10^-9) * CURRENT ETHER PRICE`
Now, the miner receives a portion of the gas cost (PRIORITY FEE) and the other portion, the protocol fee (BASEFEE), is burned.
The purpose of introducing the BASEFEE was to make transaction fees more predictable on the Ethereum network. This fee is automatically adjusted based on network conditions. Higher network congestion leads to a higher BASEFEE. Lower network congestion results in a lower BASEFEE.
Senders can still incentivize miners to prioritize their transactions by sending a miner’s tip (PRIORITY FEE). In times of high network activity there is more competition for block space and transactions with the highest PRIORITY FEE are likely to be prioritized by miners. This bidding system resembles how the gas market operated prior to EIP-1559.