PlasmaFinance Now Supports EIP-1559 for Easier Gas Fee Management
With Ethereum 2.0 well and truly on its way, many changes in the network have taken place that will benefit DeFi users, particularly the improvements on gas management and fee determination.
Last month, Ethereum activated the much-anticipated London Hard Fork with several important EIPs included:
- EIP-1559: Fee market change for ETH 1.0 chain
- EIP-3198: BASEFEE opcode
- EIP-3529: Reduction in refunds
- EIP-3541: Reject new contracts starting with the 0xEF byte
- EIP-3554: Difficulty Bomb Delay to December 1st 2021
For many DeFi users especially on Ethereum; the base layer for most DeFi protocols, the most significant update is the EIP-1559 protocol activation that addresses one of the oldest pain points in DeFi — gas fee volatility and unpredictability.
So PlasmaFinance users will be very happy to learn that EIP-1559 is fully supported on our platform! This means you are able to predict with pinpoint accuracy how much gas to set for your DeFi transactions, and how much to pay, allowing you to ensure your swaps, stakes, and all other interactions can get confirmed in a timely manner.
How to make use of gas fee settings in PlasmaFinance
Using the new gas fee implementation on the Ethereum network on PlasmaFinance is quite easy. Just observe the following steps as an example of how to Swap using the new gas fee settings.
- Connect to Plasma.Finance with your wallet and conduct your swap as you normally would.
- When you have confirmed all your transaction details and are ready to submit the transaction, simply select the “Gas settings” from the menu selection and the following menu will appear.
3. Now, you will be able to see the precise gas price required for a Standard, Fast, or Instant transaction. In the example above, an Instant confirmation (next block) will cost you $4.80 in ETH to get confirmed in about 15 seconds.
4. With EIP-1559, you also have the option to give a Miner Tip, which is just a tip to miners who confirm your transaction, because miners will appreciate your tip and prioritize your transaction! A single tip unit at x2 is $1.20, so in this example, we set 4 tips.
5. The TX Total Fee in Gwei will update automatically, along with the estimated dollar value.
6. Then, when you’re ready, just select SWAP! You’re done!
This is a rough guide to use the different Standard, Fast, and Instant settings:
Instant: We recommend this as the best option for you to do DeFi swaps or other interactions as DeFi is time-sensitive and you don’t want your transaction to take too long to process.
Fast: This is recommended for important but non-time-sensitive transactions, like paying for goods/services or sending assets to a staking pool or liquidity pool.
Standard: This should only be used for much less important transactions, for example, moving assets for long-term storage. Note that in this setting, during high network congestion, it can still be difficult to predict if or when your transaction will get confirmed.
The benefits of EIP-1559: more transparency, more predictability, more deflationary
EIP-1559 is the most major change so far to Ethereum’s market mechanisms en route to Ethereum 2.0.
Fixed price sale for better predictability and transparency.
Before, Ethereum transactions work like a first-price auction, meaning that the highest bidders (those who pay the highest gas fees) will have their transactions included into the next block. Because of this, network users constantly had to guess how much they would have to pay for gas fees. Oftentimes, users end up paying too high. But more importantly in DeFi, paying too low to get fast confirmations is a problem as volatility in rates and liquidity affect price impact greatly.
With EIP-1559, most of that guesswork is removed. You get to know in advance the ‘base fee’ to be included in the next block, bringing more transparency to stakeholders. Of course, you can still ask for a priority by adding the Miner Tip, as we showed in the example above.
Now, you can even view transparently how much people paid for gas and how much was a tip on Ethereum block explorers. Simply use “effectiveGasPrice” included in the transaction receipts to see the final gas price paid as base fee + priority fee.
ETH becomes more deflationary
One of the biggest changes in the Ethereum 2.0 ongoing update, other than moving from Proof of Work to Proof of Stake, is adopting a more deflationary mechanism. Part of the Ether/ETH that is sent as gas fees will be burnt or removed permanently from the circulating supply, thus making ETH becomes more scarce the more it is used. According to an estimate from Justin Drake, an Ethereum Foundation researcher, this burning will reduce ETH annual supply by about 1.4%. In just over 1 month, over $890 million in ETH has been burned this way.
In all, Ethereum network users can now make better estimates for transaction fees and no longer need to search external sites like ETH Gas Station or others to predict fees. The “base fee” is now implemented directly in the protocol mainnet. And with EIP-1559 fully supported on PlasmaFinance, you can see for yourself how easy it is to directly set your own accurate gas price, set your own Miner Tip, all the while reducing the delays you normally get in DeFi with transaction confirmation.
So if you’re tired of overpaying for instant confirmations or underpaying for urgent swaps, while getting the easiest, most convenient, and all-in-one experience out of DeFi, you should get on board PlasmaFinance today, to be on the fast lane!
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