More specifically, the EIP-1559 update has to do with the cost of fees, dubbed gas, and their predictability.
Previously, transaction costs – which, it should be remembered, are valued in ETH – were determined on the basis of bids: those who made transactions simply presented their bids to the miners. Those who offered a ‘normal’ price, accessed a ‘normal’ speed on the transaction side. As a result, those who needed a fast transaction were forced to pay a higher price.
With the new update, the transition costs drop significantly. Those who were paying high and unpredictable fees will now be faced with a reduced cost.
How? Through the ETH burn. Part of the commissions in ETH is “burned”, eliminated. You can’t destroy Ethereum, but you can remove it from circulation.
Basically, burnt coins are sent to addresses that no one has access to. As a result, these coins are removed from circulation and are unreachable. The cryptocurrency is removed from circulation by sending it to addresses that no one can access. This generates a deflationary effect every time a transaction occurs.
Before the update, the fees were handed over to miners who, with ETH in hand, were free to put it back into circulation. But these are starting to become obsolete and the process needed to be streamlined.
From now on, for each transaction on the blockchain, the ETH protocol uses an algorithm to set the transaction cost, which makes it standardised and therefore more predictable and easier to manage.