Subject: Re: [bitcoin-dev] Block solving slowdown

From: Andrew Cann <[email-masked]>
Date: Sun, 29 Mar 2020 04:11:36 -0400

> Fortunately in our case, only the top 4,000,000 weight worth of transactions
> gets in a block. Every bitcoin spender has an incentive to spend as little
> as possible to get into this top 4,000,000 weight and no more, but they still
> have to outbid every other user who wants the same security. Some bitcoin
> spender will then decide that overpaying slightly to ensure that they do not
> drop out of the top 4,000,000 weight even in case of a "slow" block.
>
> Thus, there will always be a need for *some* block weight limit, and that is
> what ensures that miners can get paid.

Yes, but how does this ensure that miners get paid *enough*? Every individual
making a transaction needs the miners to get paid enough for the transaction to
be meaningful, but they each individually only have the incentive to pay the
market rate for block space which is set purely by supply and demand.

It's the same as the fish farming analogy. Everyone making a transaction could
collectively decide how much miners need to get paid and agree to split the
costs. But then each individual has the incentive to renege on the agreement
and only pay the minimum they need to get their transaction included in the
block while everyone else pays for the transaction's security. My voting idea
is one potential way they could break the Nash equilibrium.

> Now it was brought up earlier that people are moving transactions offchain,
> but that is perfectly fine, because every offchain mechanism first needs an
> onchain setup, and will at some point need an onchain teardown. This
> allows increasing the effective capacity, while still ensuring that onchain
> fees remain at a level that will still ensure continued healthy operation of
> the blockchain layer. Basically, the offchain mechanism does not remove
> onchain fees, it only amortizes the onchain fees to multiple logical
> transactions.

I concede that every bitcoin user pays transaction fees, if not directly then
indirectly, so whether miners get paid through transaction fees or a block
reward is irrelevant. My concern is that moving things off-chain reduces the
transaction fees by reducing demand for block-space and that this could cause
miner revenue to drop lower than what's required to keep the network secure.

Is there any good reason to think this won't happen?

 - Andrew