Andrew Melnychuk Oseen [ARCHIVE] on Nostr: 📅 Original date posted:2023-03-04 🗒️ Summary of this message: Proposal for a ...

📅 Original date posted:2023-03-04
🗒️ Summary of this message: Proposal for a new protocol rule, min_fees, to ensure a socially optimal equilibrium in a scenario where block rewards are almost zero and transaction fees are very small.
📝 Original message:From my limited knowledge in the space, and I've taken opinions of people I respect that are far more knowledgeable than me.

I don't know of any data of what happens at the point where the coinbase drops to below the fees on any chain. I don't think there has been one where that has happened. Perhaps there is a chain out there where it is fee's only? Perhaps that can provide insight.

Opinion: I think as bitcoin's capabilities grow, demand for it will as well. There are a lot of efforts to increase the amount of transactions that can fit into a block. I think the combination of limited block space and a reduced amount of bitcoin's entering the market is the right combination for the system to self sustain. I'm looking forward to seeing the result!

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------- Original Message -------
On Wednesday, March 1st, 2023 at 12:18 PM, Giuseppe B via bitcoin-dev <bitcoin-dev at lists.linuxfoundation.org> wrote:

> Hello everyone,
>
> I'm relatively new here so what I'm proposing could have already been discussed, or may be flawed or inapplicable. I apologize for that.
>
> I was picturing a situation where block rewards are almost zero, and the base layer is mainly used as a settlement layer for relatively few large transactions, since the majority of smaller ones goes through LN.
>
> In such a case it may very well be that even if transaction amounts are very consistent, transaction fees end up being very small since there is enough space for everyone in a block. Users wouldn't mind paying higher fees as they know that that would increase the network security, however nobody wants to be the only one doing that. Miners would of course like being paid more. So everyone involved would prefer higher fees but they just stay low because that's the only rational individual choice.
>
> Therefore I was imagining the introduction of a new protocol rule, min_fees, that would work like this:
> - the miner that gets to mine a block appends a min_fee field to the block, specifying the minimum fees that need to be contained in the following block in order for it to be valid.
> - one can also mine an empty block and reset the min_fee, to avoid the chain getting stuck.
>
> min_fees could either represent the total fees of the following block, or the minimal fee for each single transaction, as a percentage of the value transacted. Both seem to have some merits and some potential drawbacks. Of course min_fees=0 would correspond to the current situation.
>
> It looks to me that this could have the potential to bring the equilibrium closer to a socially optimal one (as opposed to individually optimal), and to benefit the network security in the long term. Of course it's just a rough sketch and it would deserve a much deeper analysis. I was just interested in knowing if you think that the principle has some merit or if it's not even worth discussing it for some reason that I'm not considering.
>
> Cheers,
>
> Giuseppe.
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