How does the estimation of gas price change after implementation of EIP-1559?

Question

I understand that after EIP-1559 implementation, the fee structure changes to now have max priority fee and max fee instead of single gas price.

The question is though what could be the best strategy to estimate these? In legacy transactions, we could have used web3.eth.getGasPrice() and use the value as gas price for transactions.

Secondly, as per notes on EIP-1559; we can use the escalator mechanism to increase priority fee as the block count increases for my transaction. This looks awesome as this can avoid all the hassle of re-attempting the transactions when the gas price has increased. How can we actually apply escalator mechanism to web3 transactions?

Answer 1

Let's quickly understand how the fee is changed in EIP-1559.

1. Base Fee: Base fee is determined by the network itself.
2. Max Priority Fee: Optional. Determined by the user and paid directly to the miner.
3. Max Fee Per Gas: This is the absolute maximum fee you want to pay per unit of gas.

In the EIP-1559 transaction; we supply maxFeePerGas and maxPriorityFeePerGas. The base fee is automatically calculated by the network.

Now the base fee can increase/decrease but we have already supplied the max fee we want to pay in maxFeePerGas. So if baseFee increases in the next block, the priority fee can be adjusted to make sure the total fee never crosses the max fee.

Base Fee + Priority Fee <= Max Fee

Now about calculating the fee;

we need to get the base fee from the blockchain node and we can then decide how much max fee we want to make. Ideally, if you want your transaction to be valid even after 6 blocks (assuming the base Fee increases to a maximum per block); you can use given formulae to calculate the max fee.

Max Fee = (2 * base fee) + Priority fee

So in terms of how do we get each field:

baseFee = await (web3.eth.getBlock("pending")).baseFeePerGas
priorityFee = choose yourself
MaxFee = (2 * baseFee) + priorityFee