EIP-3651 to reduce gas charges for major network participants

The Shanghai Ethereum upgrade, the next major post-merger upgrade, is scheduled for the second half of 2023. The upgrade would be a key milestone as it would allow holders who have staked their Ether (ETH) for years of systematically removing them and making the network more scalable.

Along with some of the major scalability upgrades, the key event would also feature a few minor Ethereum Improvement Proposals (EIPs), including EIP-3651, EIP-3855, and EIP-3860. Of all the upcoming improvement proposals, EIP-3651, called WARM Coinbase, could be a game-changer and reduce network fees for some of the major network participants called builders.

Coinbase here is the name of the software that builders use to receive new tokens on the network. Each new transaction on the platform must interact with the Coinbase software multiple times. The first interaction costs more because the software has to “warm up”, then the fees decrease as the interactions increase. However, with the introduction of EIP-3651, the Coinbase software will remain hot to begin with, thus requiring lower gas fees to access it.

As the name suggests, constructors are responsible for grouping Ethereum transactions into blocks, so called block constructors. These transactions are then passed to validators, who put them in the correct order on the blockchain.

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These builders get paid by traders to arrange transactions in a block in a certain order, which means traders pay higher gas fees to get their transactions validated sooner. Currently, Flashbots is the largest builder in the Ethereum ecosystem, accounting for 80% of relayed blocks.

While validators using constructors will benefit the most from the upgrade, merchants who use constructors to execute their transactions could also benefit, as they no longer have to pay transaction fees for failed transactions. Merchants are also charged for failed transactions, as miners must confirm on-chain transactions whether they succeed or fail.

The testnet version for the Shanghai upgrade dubbed Shandong went live on October 18, and Ethereum developers will be working on various implementations until September 2023.

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