From: Damian Williamson <willtech@live•com.au>
To: William Morriss <wjmelements@gmail•com>,
Bitcoin Protocol Discussion
<bitcoin-dev@lists•linuxfoundation.org>
Subject: Re: [bitcoin-dev] BIP Idea: Marginal Pricing
Date: Sat, 2 Dec 2017 03:55:22 +0000 [thread overview]
Message-ID: <PS2P216MB01795C34139200B8537AF2549D3E0@PS2P216MB0179.KORP216.PROD.OUTLOOK.COM> (raw)
In-Reply-To: <CADpM8jr_RrbPXLx6Up8HMW-fv=noFLjy817dfsFdYTg216Pu7w@mail.gmail.com>
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I also am for the idea of removing blocksize limits if it is workable, however, would propose an alternative method for selecting transactions to be included in a block.
Some of the issues discussed in other replies to this thread are valid.
Alternative proposal:
Provide each transaction with a transaction weight, being a function of the fee paid (on a curve), and the time waiting in the pool (also on a curve) out to n days (n=30 ?), the transaction weight serving as the likelihood of a transaction being included in the current block, and then use an uncapped block size. The curve allows that the higher a fee allows a transaction to be much more likely to be included, the highest fee gets 100%, and, transactions at the n days limit get near 100%. Would need protocol enforcement since, as I understand, no miner would mine more transactions than are necessary to meet min blocksize. Other than that it should function fine. Non-urgent transactions pay a lower fee, people choose fees from fee recommendation based on how many days before a tx begins confirmation, all transactions are eventually included in the blockchain.
Regards,
Damian Williamson
________________________________
From: bitcoin-dev-bounces@lists•linuxfoundation.org <bitcoin-dev-bounces@lists•linuxfoundation.org> on behalf of William Morriss via bitcoin-dev <bitcoin-dev@lists•linuxfoundation.org>
Sent: Thursday, 30 November 2017 11:47:43 AM
To: bitcoin-dev@lists•linuxfoundation.org
Subject: [bitcoin-dev] BIP Idea: Marginal Pricing
Comrades,
Long term, tx fees must support hash power by themselves. The following is an economic approach to maximize total fee collection, and therefore hashpower.
Goals
Maximize total transaction fees
Reduce pending transaction time
Reduce individual transaction fees
Challenges
Validators must agree on the maximum block size, else miners can cheat and include extra transactions.
Allowing too many transactions per block will increase the cost of the mining without collecting much income for the network.
Problem
In the transaction market, users are the demand curve, because they will transact less when fees are higher, and prefer altcoins. The block size is the supply curve, because it represents miners' willingness to accept transactions.
Currently, the supply curve is inelastic:
[cid:ii_jalpxsnl1_1600a3d9def1eaff]
Increasing the block size will not affect the inelasticity for any fixed block size. The downsides of a fixed block size limit are well-known:
- Unpredictable transaction settlement time
- Variable transaction fees depending on network congestion
- Frequent overpay
Proposal
1. Miners implicitly choose the market sat/byte rate with the cheapest-fee transaction included in their block. Excess transaction fees are refunded to the inputs.
2. Remove the block size limit, which is no longer necessary.
Benefits
- Dynamic block size limit regulated by profit motive
- Transaction fees maximized for every block
- No overpay; all fees are fair
[cid:ii_jalqir4g2_1600a4c89811347a]
Miners individually will make decisions to maximize their block-reward profit.
Miners are incentivized to ignore low-fee transactions because they would shave the profits of their other transactions and increase their hash time.
Users and services are free to bid higher transaction fees in order to reach the next block, since their excess bid will be refunded.
The block size limit was added as a spam-prevention measure, but in order for an attacker to spam the network with low-fee transactions, they would have to offset the marginal cost of reducing the price with their own transaction fees. Anti-spam is thus built into the marginal system without the need for an explicit limit.
Rarely, sections of the backlog would become large enough to be profitable. This means every so many blocks, lower-fee transactions would be included en masse after having been ignored long enough. Low-fee transactions thus gain a liveness property not previously enjoyed: low-fee transactions will eventually confirm. Miners targeting these transactions would be at a noteworthy disadvantage because they would be hashing a larger block. I predict that this scheme would result in two markets: a backlog market and a real-time market. Users targeting the backlog market would match the price of the largest backlog section in order to be included in the next backlog block.
Examples
Scenario 1
Sat/byte Bytes Reward
400 500000 200000000
300 700000 210000000
200 1000000 200000000
100 1500000 150000000
50 5000000 250000000
20 10000000 200000000
A miner would create a 5MB block and receive 0.25 BTC
Scenario 2
Sat/byte Bytes Reward
400 600000 240000000
300 700000 210000000
200 1000000 200000000
100 1800000 180000000
50 4000000 200000000
20 10000000 200000000
A miner would create a 600KB block and receive 0.24 BTC
Thanks,
William Morriss
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prev parent reply other threads:[~2017-12-02 3:55 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
[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 [this message]
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