📺 EIP 1559 Expert Panel | Tim Beiko, Hasu, Micah Zoltu, Barnabe Monnot, Matt (LightClients)

bankless nation welcome to another state of the nation episode this is a special episode we have lined up for you because it is eip 15 5 9 week that's right the week has finally come the deployment of eip 1559 david we have so much packed in to this week but let's talk about the first event which we are hosting right now live streaming this on youtube you can catch on the podcast as usual later uh what is the panel that we have lined up today yeah we have tim baker who is one of the

guys that really stepped up to get eip1559 over the finish line and then stepped into the all-core devs coordinator position with uh with all of ethereum and so tim uh came to us and said i really want to ask some experts some some expert level eip1559 questions and so that is what is going on today tim uh pulled in who he thinks uh has uh just the best understanding as to what eip1559 is from the expert perspective so he is asking the questions that ryan i don't think you and i would have been

able to even think up uh we're not smart enough man like we're not smart enough no we were smart barely smart enough to handle the uh the eip1559 introduction with with hassu that we had a few months ago and by the way guys if you're looking for a primer on 1559 we want to refer you to that episode take a look at the bankless archives we'll include it in the show notes as well but this is a deeper dive because this panelist has the eip1559 rockstars you mentioned uh tim baco who are the other panelists david yeah we have a a bunch of uh

uh core client developers we got uh barnaby a monot we have a light clients aka matt uh we have hazu uh who uh is uh i would like to say that hazu came over to the ethereum world because of eip1559 maybe that will be a question in the show and then we of course also have micah zoltul who is a major contributor to ethereum guys you can ask questions on youtube tim is is going to be um asking questions from his own roster of questions but after the conversation

dave and i are going to pop back on hopefully ask some of our own questions and address some of the questions in youtube so ask those questions we will be documenting those as we go guys this is just event one though because the actual deployment of eip 1559 happens we're gonna say what what block number is that block number 12 million uh 965 000 i believe if i got that correct david so what time is that going to be we don't know it's on the ethereum clock schedule so it depends on block speed

but it looks like it might be around 5 00 a.m pacific time on thursday that would be 8 00 a.m eastern on thursday august 5th so you know david and i are going to be up and what are we going to be doing yeah we're going to be live streaming with the boys over from eath hub and we're also pulling in some classic ethereum community members we got hudson joining the call i just got a message from danny ryan saying he'll be there uh trent van epps is gonna be there um tim i believe tim is also going to be there so uh it's going to just be a community call of people all watching

the block of eip1559 getting mined uh and so that stream will actually be starting i think roughly around 4 30 a.m because we think that the hard fork is happening roughly around five so we want to be there a little bit early to make sure that everyone gets a chance to watch it happen live so david's gonna be up early not as early as our e2 staking live stream but still pretty early i'm glad i'm on the east coast for this one last event for you later that day on thursday we have an eip1559 bulls panel we're talking about all of bullish things that eip 1559 could mean for ethy

asset we have squish chaos dc investor james wang we are live streaming that at 2 pm the afternoon of august 5th so lots to catch up on the best way to just catch up on everything is to subscribe to the youtube channel bankless youtube and then click notifications on david one last thing and then we are going to get to the sponsors and then the panelists that is pool together they're doing some really cool things uh right now david and this is like celebration of scalability summer with pull together

so if you don't know pool together they are a no loss lottery so that means you deposit your uh eth it could be your your usd your stable coins in you don't lose any of it you only have the possibility of gaining uh they they actually use some of the d5 protocols to generate interest and then pay those out as prizes on a weekly basis so every week there's a lot of draw super cool protocol super cool way to save you can see right now if you deposit in some usdc

there's a weekly price of 50k that you could earn if you click into that they also have some loot box prizes too in every single one of these these could be um you know other coins as well so super exciting the thing i'm most excited about david is no gas fees because it is also layer two summer scalability summer and gas fees are much reduced with some of these right now side chain uh type deployments and polygon and others and i think roll ups will be coming soon so a lot happening there david anything to add no

that's pretty comprehensive ryan guys just get in the pool uh the link is in the show notes bankless dot cc slash pull together relocate your savings account to pull together all right we are going to get to the sponsors right before this panel these are the sponsors that made this episode possible balancer is a powerful platform for flexible automated market makers typical amms just have two tokens inside of one liquidity pool which can lead to fractured liquidity across the many pairs in d5 with balancer you can access the full power of multiple tokens inside

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well good morning or evening everybody um welcome to this 1559 paddle uh that i'll be running for the next hour or so um yeah so we have a lot of people here with uh pretty extensive experience with eip1569 um as you all introduce yourselves um one kind of first question i'd like to ask you is what was the moment that you kind of got 1559 and what i mean by this is that it's a pretty complicated change

uh it tends to take people like a lot of pass through it to to feel like they they fully understand it um so yeah as you just give a quick description of yourself just walk through kind of what what made you get 1559 um matt do you want to go first sure hey everybody i'm matt i go by light clients on the internet um i work for a small team called quilt we do a lot of core protocol r d and i was one of the main contributors to 15

for 1559 and go ethereum i don't think there was one specific point whenever 1559 like specifically clicked for me i think there were kind of a couple points and i originally read vitalik's paper a few months after he wrote it the pricing resources paper and i kind of at a high level understood you know 1559 is going to act like this dampener to dampen the spikes and gas prices during periods of high demand and that was something that sort of resonated fairly quickly through discussions and i kind of tucked that

away for basically two years until i really started getting evolved again in the end uh the end of 2020 um and so that was kind of one aspect i would say the other aspect of that was the the ten rough garden paper i really liked tim rufgarden's uh earlier papers on axiomatic approaches to block rewards and so when he wrote about 1559 i was like this is a really good um a really good paper describing all these things but there was there's another part of 1550 to my 1559 that didn't click for me until a

lot later and that was how it affects the security of the the protocol and i was lamenting to some people like i didn't like i'm not really the biggest fan actually of this ultrasound money meme especially for core developers i think that it's it's not really my place to you know propagate these memes and so i was lamenting to some people about this and they made this good point that we're moving to a world of proof of stake and proof of stake we have this economic requirement of ether to kind of have value to provide security to the network

and we have a data to a degree in proof of work but it's becomes there's a lot less transactional cost of mining and only miners and stuff and so at that point i kind of you know back down a little bit from this ultrasound money meme the the community can can have that meme if they want i think it's it's done it's been a valuable resource and pushing 1559 forward not my place to perpetrate it but i think that the value of ether being something that's stable is is really good for securing the network thanks for sharing that was yeah quite

the history um barter bay you want to go next so hi everyone um very happy to to be here so my name is barnabe mono i'm a researcher at the robust incentives group which is a research group funded by the ethereum foundation we mostly do things that look like game theory a bit of economics modalization simulations and actually my experience with one five five nine started uh like everyone else when i was

just trying to understand it and the way i understand things is i just try to simulate them and see kind of how they play out and this is really kind of when it clicked for me and i think the major insight that i got and that i feel okay this is when i actually understand 1559 is understanding why the dynamics of what we call the priority fee or sometimes the tip are completely different from the dynamics of the gas price as they are today which is something that many people i think still have a

bit of confusion around like why aren't we just shifting to a model where okay there's a tax the base fee and kind of people still need to compete on that tip to the niners and once you get this insight you i think you you really unlock um everything that makes one five five nine like a step change in the way that the protocol is uh doing the the gas market and so yeah i hope we can talk a bit more about this but i'll leave the other guests

thanks for for sharing um micah you want to go next yeah sure so i can actually show you guys my where i learned how eip1559 worked let me share my screen here real quick so uh back in july 2018 metallic wrote this uh article on e3 search forum it talks about basically what ended up being eip1559 and you can see here this is you know 12

am or whatever on july 3rd and then like i don't know six hours later micah shows up and i'll paraphrase so you guys don't have to all read this so it basically says come on vitalik why are you being an idiot this won't work there's no way this will work this is not new different than we have right now we can do better um then vitalik shows up and again i'll paraphrase a little bit and he basically says oh my god who is this guy i've never heard of him before he clearly doesn't know what he's talking about uh and he tries to explain some stuff to me but you can you can tell from his tone that he obviously

doesn't think i'm going to get it i'm beyond help um then you know a few hours later again this is july 4th so we're going back and forth pretty quick here um i basically just again tell him that he's wrong obviously and this cannot work and then he again tells me no you're wrong and we just basically go back and forth back and forth and then micah mysteriously disappears for like three months um and then uh i eventually come back to this thread actually maybe it was like a year later or something or another thread years

later and i came back guns blazing and i was like oh my god everybody needs to get on board with erp 1559 this is the best idea ever hopefully no one remembers what i said in the first place um so yeah so if you're curious about my learning experience go ahead and look at this link on the youth research forum and you can see how micah the person who is now probably the biggest proponent of vip1559 originally was the biggest naysayer and just spoke aggressively against everybody who thought this was a good idea

wow do you remember what made you change your mind between kind of those two those two um it was just i mean vitalik ended up being right i was wrong and so uh he he patiently explained things to me and i just didn't get it and a lot of the things i didn't get were the exact same things that people who i explain eip15592 don't get and so i can appreciate where they're coming from it's um like i was there i was that guy who was like no this this won't work you this this is not you know the mechanics are

wrong um but once you actually dig in and really let it sink into your brain the mechanics actually do work like it it does make sense um but it's not obvious at first and the specifics are kind of nuanced and maybe we'll get into that later in this call but but yes it's the same reasons everybody else thinks it won't work wow that's really turning of of the tides um cool i want to go next uh sure yeah i'm hasu hi hi everyone um

i'm a research collaborator at paradigm i'm also co-host of the uncommon core podcast and still general editor at terrible insights which i helped bootstrap um my first touch point with erp-1559 i would say was in early 2020 when i did a month long deep dive with georges um who also um well also collaborated with later on on many other kids on um erp-1559 and we did what was basically a

deep dive on all possible block space market designs that are employed in the crypto space so across all projects pretty much we look both at existing proposals and at um or basically existing implementations as well as stuff that has been proposed and try to understand why it has been like what are the goals of the proposal and and for historic stuff why has it been discarded and um a lot of stuff that has been discarded has been broken so it was very

very interesting to see all of the different stuff that you can propose and then like work through on your own why is this a broken proposal why does this not work and this is where we stumbled across erp 1559 which was barely starting to get any traction in here i would say um and yeah we like i was i would say mostly thinking about bitcoin at the time and not very much about ethereum and so my first instinct looking at this was well this is an over-engineered mess

so it has so many goals right described in the original post and so many aspects of it like so there's the fee burn there's like the elastic block size and then the code the protocol quotes a fixed price but they still have this tip option on top and it was so many things and it tried to be so many things at the same time at least what it seemed like from like reading the goals but then i tried to point out why it's actually broken and i had a lot of experience a lot of training at this because for months we

had been dissecting all kinds of blog space protocols and i couldn't and like within like a few days i realized uh yeah this is actually like all of these um moving parts are actually necessary and it just affects so many things inside ethereum that's why you can say it has so many goals but these are like really oftentimes like downstream effects right like like like like the fact for example that we burn eve is you could say like so the people who use ether's money they like that

it creates a disinflationary pressure on the price of eve but then like people who care a lot about security like that it's immense eat as the fee paying asset in in the block space market even if the user pays in any other currency like even if you get extracted away on the user side which i think like we are all for in the long term but the miner still has to keep inventory of ethan still has to burn eve so it has like all of these very nice um properties yeah um

so yeah that that was basically my my experience with yeah p1559 and um so this culminated in in our post like analysis of erp one five f9 for derivative insights um again with georgia's um yeah and this um i think this for many people was the uh well the starting point hearing about this proposal because we we used to get a lot of reads uh at the time and um i think this this was really like for us when you you had like this this crowd of people who were really interested in and

following it and asking for more and more and more content on on it and um yeah i've been in so many twitter discussions and and so on um because so many people had the same questions right that i that i had um before it clicked for me and i think it was really good training like just engaging with people on twitter and on podcasts and explaining it to them like 100 times uh engaging with the different questions so yeah here we are yeah it's it's pretty impressive how almost everybody here or i think

basically everybody here started off as a skeptic and um slowly got got converted to uh yeah to like 50 59. um bartemaeu you mentioned in your answer you know like the the new mechanism is is is obviously going to be better for for uh gas usage and whatnot and you've also mentioned to me in the past that once uh it goes lives you want to actually track that and and try to quantify the impact um so can you kind of give give us a bit of detail of like

what are you expecting to see what metrics are you expecting to change once we launched 1559 what like what would you consider a success what are you know what are some things that would kind of scare you if you saw them once once 1559 went live yeah that's a great question and i think my motivation here is really driven by the fact that i spent all this time doing simulations trying to think through okay how do things work when they're actually launched um you can't really get these answers

from let's say so we have all this test net which are awesome to test that the code is working clients understand each other but they don't really tell you so much about like the economic properties of the mechanism or really what happens when like there's actual money on the table so we know cannot go maybe too wrong because it is live in some version on some other networks but the things that i will be very much like looking at and that i think are super interesting to to keep track of

the first one is kind of looking at if you're thinking of the chain you have this matrix block by block and looking at the gas used so you have in one five five nine doubly sized blocks which allow to have like kind of this damper when you have demand shocks uh trying to understand well are the blocks getting too full so one question we often get is how often does one 559 revert to a kind of auction uh on the tip and

hassu and georgios kind of made this meme of the 95 percent of the time like things go right five percent of the time maybe there's too much people at the same time and we need to to have this auction and in in that case it's it's the mechanism still works but maybe there's more instability on the on the user side and so one question is well is it really 95 5 can we quantify how often 1559 is pushed in in this kind of regime

the second thing that i'll be looking at and it's it's certainly kind of dual to the to the gas used is actually the series of base fee themselves so we wrote a paper with some of my co-authors we've seen that most of the time basically so the basic update rule is kind of a multiplicative rule that depends on the gas that was used in the previous block these update rules they are really it's actually a fairly simple one and let's say even naive but it's it's good that it's naive in some sense because it

makes it somewhat robust to whatever the protocol can throw at it but we know that there are regions where that update rule can be maybe too slow to pick up the actual like if the demand is changing really fast you want the base p to catch up with this as fast as possible and in other regimes it can be also too fast and when it's too fast it just kind of flip-flops around a value without necessarily getting to that equilibrium and that can lead to instability in the sense that you can

see blocks which are empty because basically kind of jumped up and everybody is priced out and then it goes down everybody wants to go in and you you can have this so we know that in theory that's something that can happen in practice maybe i mean we i'll be very curious to see if we if we actually see that happen and one reason that we might see it happen which is maybe the third thing that i'll be looking at is also kind of how um so users send their transaction via their wallets and their wallets are using oracles to kind of determine

the parameters for one five five nine you have two parameters the max fee and the priority fee and depending on how these parameters are set it's possible that you can find different patterns in in the way that the transactions are first dealt with at the transaction pool level so how they kind of get ordered by the clients but even when they reach on chain uh yeah what do you observe do you observe these oscillations do you observe that maybe the oracles can be tuned uh given the data that we have on

it like we often say okay you should take this kind of random constant as a as a oracle default we will change it when we know a bit more about the mechanism when we have the data and so i think it will be very important to to kind of back test how the oracles have done especially at launch where we have this mixed regime some wallets will be still sending legacy transactions so like the old format and new wallets or same wallets but new versions will be

sending more 1559 native transactions so kind of picking apart uh yeah how wallets are doing can we backtest it can we understand uh how to make them more optimal perhaps these are definitely the things that we i'll be looking at well thanks and so to summarize at a high level um three things how often do we actually get uh this reversion to the first price auction so basically uh 100 full blocks um what how does the base re evolve do we

do we oscillate smoothly or do we just kind of you know go from full increase to full decrease um and how well do oracles adapt to set uh basically the the the priority fee for transactions right yes excellent scenario yes nice um and uh micah i think you wrote what was uh at least for me the best explanation of like why 1559 actually improves ux for end users um and i know you spend a lot

of time in in several discord servers kind of dealing with users who say have their transactions pending and stuck today um so can you take a few minutes to actually walk it through from like a kind of a a new user to ethereum um coming in like why is 1559 going to provide a better experience for them to get their transaction included than than the current system uh sure let me go find an article i wrote so i can read it real quick and remember what i said apparently it was a great argument um if

i remember correctly so basically right now what we see so i for the for those who don't know i run a little side business where um i offer so support services outsource support services to ethereum applications on it on on discord and so i have a lot of insight into what problems users run into because my team is constantly helping these users deal with those problems one of the most common problems we see with from users is stuck transactions or pending transactions same thing

different different names and so a user does a thing on uh on ethereum like they go to uniswap or they go to whatever app they're using they go to use it they plug it into in the app it pops up metamask and they say okay and they basically choose the defaults and they think that their transaction they just say this little pending spinner shows up and they're like okay my transaction should be included soon the problem is is writing an oracle is very hard so figuring out what the right gas price is is a very hard problem today and so that

that app so metamask is doing its best to try to choose a gas price that results in two two things at the same time one the user isn't overcharged so they don't set a gas price that's really high and then the user ends up paying more than they needed to and two a gas price that is not too low that the user's transaction doesn't get included when gas prices are stable so when the demand for block space and ethereum is very stable over time meaning like the exact same number of people want to be included as are submitting you know

spread out over let's say 15 minutes then this this problem is pretty easy you just say okay what was the you know look at that previous blocks okay they're all around you know 20 or whatever so 20 is what we'll set this problem becomes much much harder when the demand for ethereum is increasing for for any reason so it increases because there's an ico or a new nft sale or just because people in the us are waking up or because it's a weekend or a weekday or you know it's the second thursday of the month and it's payday in you know azerbaijan or

whatever you know whatever it is that causes gas demand of ethereum to increase um is very complicated like this is the whole world of people doing things and for some reason they have all decided to do things on ethereum right now and so what happens is the user shows up fills in their men fills in everything hits submit and a gas price is set by metamask using oracle that usually works pretty well but this time it didn't because it estimated a gas price based on history and demand is increasing and so the gas price keeps going up and up and up and up

but the problem gets worse so the user has a stuck transaction you think okay well they can just increase their grasp price the problem is the user doesn't know this the user just knows their transaction is stuck so they what do they do like okay i'll refresh the page so they refresh the page but now the page doesn't remember that their head of pending transactions so then it just prompts them again hey what do you want to do on the internet and they say oh i want to swap some coins so they go and fill in the form again they swap some coins and hit the button and it still doesn't work so they try another browser and they repeat the process and now by the time the user comes to us for support or comes to somebody for support

they've got like six transactions out there if we're lucky someone helps them that can walk them through the process now of canceling all those transactions because the user only one do one swap but they've got six swaps pending and so someone will walk into the process of cancelling the transactions which is not super hard but it's you know it's kind of technical and users don't really understand what's going on so it's kind of blindly following people on internet who are giving them advice and we all know that's a terrible idea um and so like that's that's the happy path where people are following advice of random

strangers on the internet to fix their problem the unhappy path is they don't go seeking help soon enough and what ends up happening is all six of those transactions go through and instead of buying you know five east worth of dogecoin they now have bought 400 east worth of dogecoin and they do not want 400 eth worth of dosh coins it turns out that drop tanks the dogecoin price or whatever it was they were doing like the thing they're doing is not the thing they wanted to do and so now you have a very unhappy user who now is seeking help and like how do i