From: William Morriss <wjmelements@gmail•com>
To: Chenxi Cai <Chenxi_Cai@live•com>
Cc: Bitcoin Protocol Discussion <bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIP Idea: Marginal Pricing
Date: Wed, 29 Nov 2017 22:05:02 -0800 [thread overview]
Message-ID: <CADpM8jrOfjCaHAu97MGaaAouYootyBCwuBw1fvay0zK8pnwRVg@mail.gmail.com> (raw)
In-Reply-To: <CY4PR1201MB019720B8D7C7AE10182F893186380@CY4PR1201MB0197.namprd12.prod.outlook.com>
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On Wed, Nov 29, 2017 at 9:52 PM, Chenxi Cai <Chenxi_Cai@live•com> wrote:
> Hi All,
>
>
> Auction theory is a well-studied problem in the economics literature.
> Currently what bitcoin has is Generalized first-price auction, where
> winning bidders pay their full bids. Alternatively, two approaches are
> potentially viable, which are Generalized second-price auction and Vickrey–Clarke–Groves
> auction. Generalized second-price auction, where winning bidders pay their
> next highest bids, reduces (but not eliminate) the need for bidders to
> strategize by allowing them to bid closer to their reservation
> price. Vickrey–Clarke–Groves auction, a more sophisticated system that
> considers all bids in relation to one another, elicit truthful bids from
> bidders, but may not maximize miners' fees as the other two systems will.
>
>
> Due to one result called Revenue Equivalence, the choice of fee design
> will not impact miners' fees unless the outcomes of the auction changes
> (i.e, the highest bidders do not always win). In addition, the sole benefit
> of second-price auction over first-price auction is to spare people's
> mental troubles from strategizing, rather than actually saving mining fees,
> because in equilibrium the fees bidders pay remain the same. Therefore, in
> balance, I do not see substantial material benefits arising from switching
> to a different fee schedule.
>
>
> Best,
>
> Chenxi Cai
>
>
Changing the bidding system to the marginal price allows us to supersede
the block size limit, which changes the outcome of the auction, as
different transactions are included.
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next prev parent reply other threads:[~2017-11-30 6:05 UTC|newest]
Thread overview: 12+ messages / expand[flat|nested] mbox.gz Atom feed top
2017-11-30 0:47 William Morriss
2017-11-30 2:38 ` Ben Kloester
2017-11-30 6:13 ` William Morriss
2017-11-30 11:40 ` Gregory Maxwell
2017-11-30 12:03 ` Eric Voskuil
2017-11-30 9:37 ` Federico Tenga
2017-11-30 5:52 ` Chenxi Cai
2017-11-30 6:05 ` William Morriss [this message]
[not found] ` <CY4PR1201MB0197936CBE467B38DCC26DC986380@CY4PR1201MB0197.namprd12.prod.outlook.com>
2017-11-30 16:15 ` Chenxi Cai
[not found] ` <CAAS2fgS5jiNCmdwEt3YtZMJ0SfhC8Hw1eXr_0Vo5AQhYv7bJfg@mail.gmail.com>
2017-11-30 9:12 ` Gregory Maxwell
2017-12-01 7:58 ` Ryan J Martin
2017-12-02 3:55 ` Damian Williamson
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