Author: Luzius Meisser 2016-01-28 20:16:41
Published on: 2016-01-28T20:16:41+00:00
The debate around Bitcoin block size continues as developers discuss proposed solutions. One developer, Warren Togami Jr., argued that a proposal like BIP100, where the block size is subject to a vote by miners, is suboptimal because it does not align with the marginal cost of the entire flood network. He suggested a flex cap mechanism instead, which allows for an actual cost associated with a vote and allows block size to grow with actual demand. There are two types of flex cap mechanisms: those that ensure supply is based on the actual costs of miners, and those that replace today's centrally planned constant cap with a centrally planned supply curve. Togami believes the former is preferable because it could lead to a competitive equilibrium with free market prices. Luzius Meisser proposed an idea where only 10% of the collected fees in a block are paid out to the miner, with the remaining 90% added to the collected fees of the next block, creating a rolling average of collected fees from current and past blocks. However, Togami argued against mandatory sharing, as the miner can take payment out-of-band and confirm the transaction with little or no fees visible in the block. Meisser also proposed a flex cap solution in which there is a flexible block cap and miners can buy additional space for an exponentially increasing fee, with the price of the purchased space subtracted from the collected fees and added to the reward of the next block. The amount miners spend on additional space allows for the calculation of their marginal costs per transaction. Every 1000 blocks, the basic cap is adjusted upwards or downwards depending on whether the average fees per KB were above or below the global cost estimate. Togami suggested allowing miners to vote on block size, as has been proposed by others, but warned that this could allow miners to enforce a cartel among themselves and charge monopoly prices instead of competitive prices. He argued that the transaction fees that emerge under BIP100 would be higher than those that would emerge with a flex cap mechanism based on the total marginal costs of miners. He believes that a holistic analysis is necessary to understand the benefits of running a full node and counter-intuitively, increasing block sizes can make it more attractive to run a full node, depending on the circumstances.
Updated on: 2023-06-11T03:22:31.500130+00:00