Subject: Re: [bitcoin-dev] Rebatable fees & incentive-safe fee markets

From: Peter Todd <[email-masked]>
Date: Thu, 28 Sep 2017 22:02:27 -0400

On Thu, Sep 28, 2017 at 06:06:29PM -0700, Mark Friedenbach via bitcoin-dev wrote:
> Unlike other proposed fixes to the fee model, this is not trivially
> broken by paying the miner out of band.  If you pay out of band fee
> instead of regular fee, then your transaction cannot be included with
> other regular fee paying transactions without the miner giving up all
> regular fee income.  Any transaction paying less fee in-band than the
> otherwise minimum fee rate needs to also provide ~1Mvbyte * fee rate
> difference fee to make up for that lost income.  So out of band fee is
> only realistically considered when it pays on top of a regular feerate
> paying transaction that would have been included in the block anyway.
> And what would be the point of that?

This proposed fix is itself broken, because the miner can easily include *only*
transactions paying out-of-band, at which point the fee can be anything.
Equally, miners can provide fee *rebates*, forcing up prices for everyone else
while still allowing them to make deals.

Also, remember that you can pay fees via anyone-can-spend outputs, as miners
have full ability to control what transactions end up spending those outputs.

The fact these countermeasures are all likely to be implemented - all of which
harm the overall ecosystem by reducing visibility of fees and making it harder
to compete with centralized miners - makes me very dubious about that proposal.

-- 
https://petertodd.org 'peter'[:-1]@petertodd.org