Subject: Re: [Bitcoin-development] Proposed alternatives to the 20MB step function

From: Thomas Voegtlin <[email-masked]>
Date: Mon, 11 May 2015 01:11:55 +0200

Le 11/05/2015 00:31, Mark Friedenbach a écrit :
> I'm on my phone today so I'm somewhat constrained in my reply, but the key
> takeaway is that the proposal is a mechanism for miners to trade subsidy
> for the increased fees of a larger block. Necessarily it only makes sense
> to do so when the marginal fee per KB exceeds the subsidy fee per KB. It
> correspondingly makes sense to use a smaller block size if fees are less
> than subsidy, but note that fees are not uniform and as the block shrinks
> the marginal fee rate goes up..
> 

Oh I see, you expect the sign of the dE/dx to change depending on
whether fees exceed the subsidy. This is possible, but instead of the
linear identity, you have to increase the block size twice as fast as
the difficulty. In that case we would get (using the notations of my
previous email):

D' = D(1+x)
F' = F(1+2x)

and thus:

E' - E = x/(1+x)P(F-S)

The presence of the (F-S) factor means that the sign reversal occurs
when fees exceed subsidy.

> Limits on both the relative and absolute amount a miner can trade subsidy
> for block size prevent incentive edge cases as well as prevent a sharp
> shock to the current fee-poor economy (by disallowing adjustment below 1MB).
> 
> Also the identity transform was used only for didactic purposes. I fully
> expect there to be other, more interesting functions to use.