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Combination EIP1559 / escalator

TL;DR: We present three models for combining EIP1559 and escalator. Of the three, only one really makes sense for us (the floating escalator model), while the other two (thresholded escalator and fixed escalator) are presented for the sake of providing a complete exploration of the design space.

Base dynamics and parameters

Base parameters

  • c = target gas used
  • 1 / d = max rate of change
  • g[t] = gas used by block t
  • b[t] = basefee at block t
  • p[t] = premium at block t

Dynamics

EIP 1559 dynamics

  • b[t+1] = b[t] * (1 + (g[t] - c) / c / d)

Linear escalator, given startblock, endblock, startpremium and maxpremium

  • p[t] = startpremium + (t - startblock) / (endblock - startblock) * (maxpremium - startpremium)

Thresholded escalator

Intuition: Vanilla escalator with the condition that a bid cannot be included if the gasprice is lower than the current basefee.

User-specified parameters

  • startbid
  • startblock
  • endblock
  • maxpremium

Computed parameters

  • startpremium = 0

Gas price

gasprice[t] = startbid + p[t]

# Include only if
assert gasprice[t] >= b[t]

Pros/cons

Pros

  • "Pure" escalator, only modulated by the presence of the basefee which determines inclusion or not.
  • Wallets can default to startbid = b[t]. This is the fixed escalator model.

Cons

  • Cannot write EIP 1559 simple strategy basefee + fixed premium under that model.

Fixed escalator

Intuition: Vanilla escalator with a reasonable startbid parameter provided by the current basefee.

User-specified parameters

  • startblock
  • endblock
  • maxfee
  • startpremium

Computed parameters

  • maxpremium = maxfee - b[startblock]

Gas price

gasprice[t] = min(
  max(b[startblock] + p[t], b[t]),
  b[startblock] + maxpremium
)

# Include only if
assert gasprice[t] >= b[t]
  • Gas price set to either current basefee b[t] OR basefee at the start of the escalator b[startblock] + current premium p[t], whichever is higher, bounded above by the maxfee.
  • Setting startpremium = 0 means starting bid = basefee.

Bid in solid purple line, basefee in blue.

Pros/cons

Pros

  • Respects intuition of basefee as good default current price + escalating tip.
  • For stable basefee, looks like escalator with a well-defined startbid.

Cons

  • Gas price can raise faster than the escalator would plan, if basefee increases faster than the escalator slope. Should the premium follow? See "floating escalator started on basefee".
  • Cannot write EIP 1559 simple strategy basefee + fixed premium under that model.

Floating escalator

Intuition: The "true" EIP 1559 with escalating tips. User specifies an escalator for the tip, which is added to the current basefee always, as opposed to the basefee at startblock for the fixed escalator. Users specifying a steeper escalator "take off" above other users, expressing their higher time preferences.

User-specified parameters

  • startblock
  • endblock
  • startpremium
  • maxfee OR maxpremium OR both.

Computed parameters

  • If maxfee is given: maxpremium = maxfee - (b[startblock] + startpremium)
  • If maxpremium is given: maxfee = b[startblock] + maxpremium
  • If both are given, NA.

Gas price

gasprice[t] = min(
  b[t] + p[t],
  maxfee
)

# Include only if
assert gasprice[t] >= b[t]

Gas price set current basefee b[t] + current premium p[t], bounded above by maxfee.

Bid in solid purple line, basefee in blue.

Pros/cons

Pros

  • Respects intuition of basefee as good default current price + escalating tip.
  • For stable basefee, looks like escalator with a well-defined startbid.
  • For unstable basefee, escalates tip in excess of the current basefee, unlike the fixed escalator.
  • Setting startpremium = maxpremium and some maxfee, this is equivalent to the EIP 1559 paradigm (with endblock far into the future).

Bid in solid purple line, basefee in blue.

Cons

  • "Double dynamics" of basefee varying + tip varying, maybe hard to reason about.
  • You can reach your maxfee much faster than you intended if basefee increases during the transaction lifetime.