Gas Model

Dynamic Gas Pricing:

• Gas prices adjust based on network congestion.

• EIP-1559 Style Fee Mechanism:

  • Introduces a base fee that adjusts per block, with an optional priority fee (tip) to incentivize miners.

Transaction Fees

Transaction Fee Calculation

Equation:

$$Transaction Fee=Gas Used×Gas Price\text{Transaction Fee} = \text{Gas Used} \times \text{Gas Price}Transaction Fee=Gas Used×Gas Price$$

With EIP-1559 Style Fee Mechanism:

$Total Fee=(Gas Used×Base Fee)+Tip\text{Total Fee} = (\text{Gas Used} \times \text{Base Fee}) + \text{Tip}Total Fee=(Gas Used×Base Fee)+Tip$

Explanation:

• Gas Used: The amount of computational work required.

• Gas Price: The price per unit of gas, adjusted dynamically.

• Base Fee: The minimum fee per gas unit, burned to reduce supply.

• Tip: An additional fee paid to miners as an incentive.

• Users pay gas fees calculated as Gas Used × Gas Price.

• Fees are deducted from the sender's account upon transaction execution.

Fee Distribution:

• Base Fee Burn:

  • A portion of the base fee is burned (removed from circulation), potentially reducing total supply over time.

• Miner Incentives:

  • Miners receive the priority fee (tip) and a portion of the base fee as an incentive.