Subject: [bitcoin-dev] Minimum fees

From: Giuseppe B <[email-masked]>
Date: Wed, 1 Mar 2023 21:18:22 +0100

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.