Topic: Would a Coin with percent based fees fix mining incentives ? (Read 354 times)

Absolutely.

What I am saying is, currently the fees mentality is that everyone should pay the same fee, regardless of the txn amounts. And that maybe percent based fees work better..

If we do a little maths :

Let's say - hypothetically - that the bitcoin network is handling 1000 txn/s. And that all the users pay the same txn fee.

There are  : 60s x 60min x 24hrs x 365days = 31,536,000 seconds in a year

1000 txn/s x 31,536,000 = 31,536,000,000.. so about 31 billion txn/year.

So - if the txn fee is $0.1, 10 cents, we the users will be paying $3.1 billion to the miners. This is also the entire security of the network.  This means that an attacker with access to more than $3.1 billion/year could invest as heavily as the miners and basically, rule the roost.. There are plenty of individuals who are worth more than that alone, let alone corporations.

It's just not that much, and so to keep the network safe, the txn fee would need to go up.

At $1 per txn, you are 'starting' to get somewhere, $31 billion, but it's no good to anyone wanting to buy small 'bar of chocolate' items.

And that's if $31 billion is enough..

Miners control how much people pay to put transactions in their blocks by their inclusion policy.

In Coins, there is a fee to pay for sending the TXN.

This not only incentivises the miner to add your TXN to a block, and pays for the upkeep of the network (in the long run), but also acts as a DDOS blocking system as SPAM costs money.

In Bitcoin, there is a heated debate going on at the moment about whether the block size should be increased.

With a larger block, there can be more TXN's and so the user thinks he should have cheaper fees per TXN.

This means that a larger block with more TXN's will not 'necessarily' mean that the miner makes more. A block that has twice as many TXN's with half the fee per TXN makes the same. This is not a clear incentive for the miner. I admit that normally more TXN's mean more for the miner but the correlation is not straight forward.

It seems to me this stems form having a 'fixed variable' fee for all. One size fits all.

IF instead the fee was, let's say for simplicity 1%, it would ALWAYS be the case that more TXN's would mean more fees for the miners ? (Assuming the same TXN set for both systems). Then the miners would be happy to have bigger blocks, although you would need some 'mechanism' to contain the pace of growth.

It would also fix coin destruction.. as a miner would obviously take his 1% cut of an aged coin, rather than let it all go back into the mix for ALL the miners to share.

..And micro TXN's are also back on the table.

Thoughts ?