Abstract: We evaluate the theory behind the new Ethereum transaction fee mechanism, EIP-1559. Under the new model there are two elements to the transaction fee, a base fee which is burned, and a tip, which is allocated to block producers. The base fee is determined by the allocation of scarce block space to users, while the tip can be determined by other fee market considerations, such as preventing transactions from being censored. EIP-1559 therefore removes the link between transactional demand and the incentivisation of the consensus agents, to some extent, which could improve the stability of the network. The new mechanism should improve the user experience, ensuring users know with more precision what transaction fee they need to pay in advance. We conclude by arguing that as long as scarce blockspace remains the most significant driver of fees, EIP-1559 should improve the user experience as designed. On the other hand, if other factors begin to drive the fee market, some of the