Author: Gregory Maxwell 2015-05-10 21:33:15
Published on: 2015-05-10T21:33:15+00:00
In an email exchange from May 2015, Gavin Andresen expressed his opinion on algorithms that tie difficulty to block size. He considered them as a complicated means of dictating minimum fees. However, he acknowledged that this was not the long-term effect or motivation behind such algorithms. He explained that with a large subsidy, the marginal value of the first byte in the block is huge, which pushes up the average fee and creates the "base fee effect." This effect incentivizes miners to increase the block size until the marginal value of the transaction data being left out is not significantly smaller than the value of the data in the block on average.Andresen noted that as the subsidy decreases, fees become relative only to other fees. An earlier version of the proposal aimed to take the subsidy out of the equation by increasing it linearly with increased difficulty. However, this solution created additional complexity in implementation and explanation. In the absence of the subsidy, the starting disadvantage parameter would need to be much smaller.
Updated on: 2023-05-19T20:16:47.019516+00:00