Vitalik Buterin, Ethereum co-founder, explores new transaction fee model
Vitalik Buterin, the inventor of Ethereum has presented his ideas on GitHub regarding the alteration of the existing transaction fee model. This already prevalent auction model involves the highest fee for transaction. The Ethereum co-founder has previously discussed the idea at online forums and recently at the event of Crypto 2018.
The ZCash community has greeted the idea presented by Buterin and asked him to initiate a discourse on the same issue. He has elaborated stating that the public blockchain based platforms including ZCash and Ethereum have been adopting a block size with particular limit. It also involves the adoption of fee market for regulating the transaction inclusion.
The reason given by Buterin is the prevention of scamming activities conducted by the users on the blockchain. The technique compels the senders of the transaction to make payment for the amount imposed on network. He has mentioned and then elaborated three major issues concerning transaction fee markets.
Statements of Vitalik Buterin
As per his statement, the first issue includes “Mismatch between volatility of transaction fee levels and social cost of transactions.” The second problem is the “inefficiencies of first price auctions”. The third issue involves “Instability of blockchains with no block reward”.
He has given an assurance that his idea has the potential to address and resolve all the issues. The idea involves the removal of fee calculations in the current times that lead to volatility. It also introduces a protocol for the determination of fixed fee that fuses with the formula that permit integration of the real-time capacity.
According to the statement of Vitalik Buterin, “I will suggest an alternative mechanism that mitigates all three of the issues. The protocol internally maintains a fee level
f, and a miner that creates a block that includes
d bytes (or gas, or weight units, or whatever) must pay a fee of
f * d, which gets put into a pot (in practice, this means that the miner will only accept transactions that pay that much in fees to compensate the miner). There is a maximum weight limit
He has further added, “if the last block was 50% full, leave the fee unchanged, if the last block was 10% full, drop it by 10%, if the last block was 90% full, increase it by 10%.” The setbacks pertaining to mismatch in the social cost because of volatility can be removed with his method.
In his words, “Intuitively, the adjusting fee mechanism works like a fixed fee in the short run and a cap in the long run, and it turns out that because of arguments from Martin Weitzman’s 1974 paper fixed fees are likely better than a cap in the circumstances that basically all public blockchains are in today and will likely continue to be in.”
He is of the opinion that extensive research can be conducted in the particular area. He has commented, “So there’s still a lot of stuff here to kind of implement, to think about in terms of what’s the right way to implement these kinds of schemes and there’s still a lot of further research needed but again the point here is right that, aside from the research into technical improvements like ‘proof of stake’, like scalability and like privacy improvements as your knowledge proofs there are a lot of these improvements that can be made on the economic layer in order to basically improve the blockchains efficiency, make blockchains easier.”
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