EIP-1559 base fee vs priority fee: how ethereum fees work now
Before August 2021, Ethereum fees were a single number. You set a gas price; if it was high enough, a miner included your transaction. That system had a known flaw: users could not know what the right price was. Fee spikes caught people off guard, and overpaying was the only safe strategy.
EIP-1559 changed that. It split the fee into two parts: the base fee and the priority fee. Understanding the difference is the difference between being in control of your transaction cost and hoping for the best.
The base fee: the minimum the network demands
The base fee is the floor price for a transaction to be considered valid. Every transaction must pay it. The fee is not optional.
A crucial mechanic: the base fee is burned. It does not go to validators. It is destroyed, which means the amount of ETH in circulation decreases with each block. The burn does not make fees cheaper. It changes what happens to the money you pay.
The base fee adjusts automatically. It is not set by users or validators. It is determined by how full the previous block was.
How block fullness adjusts the base fee
Ethereum blocks have a gas target, the ideal amount of work per block. Currently, the target is 15 million gas, while blocks can hold up to 30 million gas, the limit.
If the last block was more than 50% full - above the target - the base fee goes up by up to 12.5% per block. If the block was less than 50% full, the base fee goes down by up to 12.5%.
This creates a feedback loop. High demand pushes fees higher; lower demand lets them fall. The mechanism is designed to keep blocks around half full on average. It does not cap fees. It makes them predictable in how they change.
The Priority Fee: Your Bid to Jump the Queue
The base fee only gets your transaction included eventually. It does not guarantee fast inclusion. That is what the priority fee is for.
The priority fee is an optional tip you add on top of the base fee. This tip goes to the validator who proposes the block and is not burned.
Why pay a priority fee? Validators order transactions within a block, and they are rational actors who put transactions with higher tips first. If you set a priority fee of zero, your transaction waits until the validator has processed everyone who paid extra. In a busy network, that wait can be long. You are not bribing the entire network; you are paying for position.
Why You Set a Max Fee per Gas and a Max Priority Fee
Before EIP-1559, users set a single gas price. If the network got congested after you sent the transaction, your inexpensive transaction might sit pending for hours - or never get included.
Now you set two numbers. First, the max fee per gas: the absolute maximum you are willing to pay per unit of gas, covering both the base fee and the priority fee. Second, the max priority fee per gas: the most you will tip the validator.
Your wallet calculates the exact gas price at the time of the transaction. The base fee is known from the latest block. The wallet adds your priority tip, and the total must be below your max fee for the transaction to be valid. If the base fee spikes above your max fee, your transaction cannot be included and sits until the base fee falls. That is the trade-off: you cap your cost but risk delay during spikes.
The misconception: EIP-1559 made fees permanently lower
It did not.
The London hard fork that introduced EIP-1559 did not reduce the underlying cost of using Ethereum. It changed how fees are calculated and where the money goes. The base fee can rise to astronomically high levels during congestion, and it has happened multiple times since 2021.
What EIP-1559 improved was fee predictability. Under the old system, you had to guess a gas price. Now you know the current base fee and the block fullness, so you can estimate how quickly fees will rise or fall. You still pay whatever the market demands. High demand equals high fees - that fact has not changed. The difference is that now you understand the mechanics: the base fee is the floor, the priority fee is your bid for speed, and the burn ensures that every transaction reduces the available ETH supply, regardless of the fee level.
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