https://uncommoncore.co/eip-1559/#impact-miner-revenue
Ultimately, the total capacity in a block remains the same, and the supply of transactions doesn’t change. Only more scalability can lower gas fees in the long-term.
With EIP-1559, what we currently know as transaction fees will be split into two parts: The basefee (set by the protocol) and the tip (set by the market). The basefee of each transaction will be burned, while the tip will continue to go to the miners.
https://s3-us-west-2.amazonaws.com/secure.notion-static.com/c4baa693-fb0a-45ac-902c-8edcffd09817/AxFq8DieK6DCrAM2rjHiD9If6_tM4c1VHXCfmY9Cl00Zqne_f_HjBeuaKxCDy3iGp4Q_O_YCiwqKSBjAWGAgJh1c_Lzml2IA_nNQb93h2nPqI8VhzHfuLitszRIJXOhzmEWXGmyy
Image: What happens to current miner revenue sources post EIP-1559
The impact this has on miner revenue isn‘t as easy to predict as you would initially think, for two reasons:
First, we don‘t know what the split between basefee and tips will be. Until recently, most people thought (and still think) that almost all fees would be burned, but this won‘t be the case.
That is because gas does not equal gas. The existence of markets on top of Ethereum (such as exchanges, lending protocols, etc.) creates a constant stream of financial arbitrage opportunities. These opportunities, e.g. to arbitrage the price between two Defi exchanges or between one Defi and one Cefi exchange, to liquidate borrowers or margin traders, and so on, have tremendous financial value. But they can only be performed by the first trader who gets them mined on the blockchain.
That is why the first 10-20 transactions in every block tend to pay disproportionate amounts of transaction fees – much more than is necessary to get included in the block. They do this because they must be early in the block to complete their trade. Miners currently benefit tremendously from these transactions, many of them without even knowing about it.
This revenue would be unaffected in EIP-1559, because it would be paid via the tip, not the basefee, and hence isn’t burned. Georgios and I have recently quantified the importance of these “priority transactions” relative to normal transactions, and made a surprising discovery.
Depending on how much MEV is correctly classified by our data source (MEV-Explore v0, powered by Flashbots), we can see that miners are likely making more money from selling priority gas today than from selling regular gas. As a result, less than half of today’s fees could be burned by EIP-1559.
Image: Subsidy vs fees vs MEV depending on how much MEV we correctly classified
Second, miner revenue also depends heavily on the price of ETH. For example, if EIP-1559 lowers miner revenues (in ETH) by 30%, and the price of ETHUSD increases by 43%, miner revenue would be exactly the same in USD.
There are good arguments why EIP-1559 should be indeed very positive for the price and adoption of ETH, see Is EIP-1559 good for ETH?