ETHNews has been monitoring a suspicious spike in estimated gas prices on the Ethereum network and was able to discuss the phenomenon with one of the Ethereum Foundation's chief software engineers, Nick Johnson.
The issue stems from functionality within the gas pricing oracle algorithm for Ethereum's Geth client.
"The previous algorithm looked over the last few blocks' transactions, and returned the median of the gas price paid by those transactions," Johnson said. "In the past, this has worked reasonably well, since the network was often not running at 100 percent capacity. And when it was, gas prices nevertheless tended to return to something reasonable after a spike in activity such as that around ICOs or CryptoKitties."
Recently, however, something odd has been affecting the estimated gas price, which is in turn influencing the median average calculated by the pricing oracle. Although it is still possible to manually lower the gas price when transacting over Ethereum, the increasingly high estimates are particularly dangerous for users who are unaccustomed to having to check and set transaction costs themselves.
"This appears to be due to someone paying very high prices for transactions, inflating the median," said Johnson. "As a result, we've been reassessing how the oracle provides recommended gas prices."
Using data from blockchain explorer websites like ETH Gas Station, the Ethereum Foundation is looking to modify the pricing oracle algorithm.
"Instead of taking a percentile (median is the 50th percentile) of recent transaction fees, we instead take a percentile of the minimum gas price in recent blocks. So, for example, if the lowest price transaction in 5 recent blocks was 1, 5, 10, 12, and 15 GWei and we're working off the 60th percentile, we recommend a gas price of 10 GWei. It doesn't matter how many transactions were mined in each of those blocks at the minimum gas price, just that some were," Johnson expounded. "Empirical evidence gathered by [ETH Gas Station] shows this works a lot better than taking medians of transaction prices, and results in better estimates that overspend less and lead to quick inclusion, in the majority of cases."
He went on to explain:
"I'm presently running a simulation that tests these parameters out against the last weeks' worth of blocks on the main network to determine how often the returned value is suitable – so far it's looking very good."
ETHNews will continue to track this story and provide updates as they are available. For now, we are pleased to report that the Ethereum Foundation is aware of the issue and is seeking to remedy it as soon as possible.