EIP-1559 – Detailed Fee Structure Terminology

It is not really true at the moment that you can pay fees in anything except ETH, although there is some discussion about changing this. The way things normally work, you have to pay the fee in ETH. When you sent REP to the exchange you probably used ETH in your own account to deposit tokens in the exchange, and the exchange would have paid for the transaction to send them back out.

In theory, since it's up to the miner whether they include your transaction, you could send a low or zero fee in ETH and have a separate arrangement with a miner where you would give them some ERC 20 token, or send them USD via PayPal, or FedEx them a chicken. This depends on the miner thinking what you are giving them is valuable and being prepared to accept it as payment. If you've sent them a chicken but they don't want one, or you've sent them an ERC 20 token that they've never heard of and don't consider valuable, you shouldn't expect them to mine your transaction.

Update (Dec, 2021): Since EIP1559, the account must hold ETH to pay the fee at the time it is included in the block, and most of this ETH is burned (disappearing, to the benefit of anyone holding ETH whose ETH become proportionally more valuable) rather than being given to the miner. It is still technically possible for a miner to include a transaction from an account with no ETH at the time of sending, but they will have to add a transaction before it crediting the account with the ETH required to pay the fee.

Let's quickly understand how the fee is changed in EIP-1159.

1. Base Fee: Base fee is determined by the network itself.
2. Max Priority Fee: Optional. Determined by the user and paid directly to the miner.
3. Max Fee Per Gas: This is the absolute maximum fee you want to pay per unit of gas.

In the EIP-1159 transaction; we supply maxFeePerGas and maxPriorityFeePerGas. The base fee is automatically calculated by the network.

Now the base fee can increase/decrease but we have already supplied the max fee we want to pay in maxFeePerGas. So if baseFee increases in the next block, the priority fee can be adjusted to make sure the total fee never crosses the max fee.

Base Fee + Priority Fee <= Max Fee

Now about calculating the fee;

we need to get the base fee from the blockchain node and we can then decide how much max fee we want to make. Ideally, if you want your tx to be valid even after 6 blocks (assuming the base Fee increases to a maximum per block); you can use given formulae to calculate the max fee.

Max Fee = (2 * base fee) + Priority fee

So in terms of how do we get each field:

baseFee = await (web3.eth.getBlock("pending")).baseFeePerGas
priorityFee = choose yourself
MaxFee = (2 * baseFee) + priorityFee